Goldman Sachs: Demand Decline and Middle East Supply Disruptions Pose Two-Way Oil Risks
0xBroomberg
Goldman Sachs warns Brent crude faces roughly $10 of risk in each direction — sagging demand pulling prices down while Middle East supply disruptions push them up, both forces live at the same time.
What does Goldman mean by "two-way risk"?
On one side, demand is deteriorating: April oil-sales data from China and Western Europe suggest actual demand could fall ~2 million barrels per day below Goldman's already-lowered forecast.
On the other side, supply is tightening: the Iran war has sharply cut Persian Gulf shipments through the Strait of Hormuz, forcing millions of barrels offline.
In plain terms = oil prices are being pulled down by one hand and pushed up by another, and Goldman sees both hands as roughly equal in strength.
What does a 2-million-barrel-per-day demand gap mean?
Goldman analyst Daan Struyven's team wrote on May 31 that this gap implies about $10/barrel of downside pressure on their Q4 Brent forecast of $90/barrel.
The report states: "The magnitude of the response of actual end-use oil demand to high prices may exceed prior expectations."
This reflects a key judgment — high oil prices are destroying their own demand, particularly in jet fuel and petrochemical feedstocks.
How weak is China's oil demand?
London-based consultancy Energy Aspects projects China's crude imports this year at just 10.9 million barrels per day — the lowest since the pandemic.
This means → the world's largest crude importer is seeing a structural demand contraction that the consultancy believes may not reverse.
How large is the Iran-war supply shock?
Since the Iran war broke out in late February, Persian Gulf shipments through Hormuz have plunged, with millions of barrels of capacity forced offline.
Brent has risen more than 25% since the conflict began.
Yet as of Monday, Brent futures traded near $93/barrel, after closing Friday at a six-week low — markets are warming to hopes of a U.S.-Iran peace deal.
What should an ordinary investor take away?
Goldman's core call: Middle East supply losses pose significant upside risk, while weakening demand poses clear downside risk — both exist simultaneously.
In plain terms = oil could jump another $10 on an escalation or drop another $10 on a demand collapse — direction is unresolved.
This means → this is not a good moment for one-way bets on oil prices; the uncertainty itself is the most certain thing right now.
Brent crude — headed to $100 or back to $80?
BULL
Supply risk persists
The Iran war continues; Hormuz shipments have plunged, millions of barrels offline.
Geopolitical premium intact
Brent has rallied over 25% since the conflict; a peace deal is not settled.
BEAR
Demand destruction accelerating
High prices are killing demand; Goldman sees a 2 million bpd downside gap.
China imports at post-Covid low
Full-year imports may be just 10.9 million bpd — lowest since the pandemic.
Put simply = both forces rest on hard data. Which one wins depends on how the war evolves and when China's economy turns — and right now, nobody has that answer.
Content is for reference only, not financial advice.