2:29 a.m. Goldman Sachs released a research note. To be honest, I forwarded it after reading just the first paragraph.
Personally, I don’t trade the energy sector very often. It requires a deep understanding of industry cycles and long-term sector observation.
Roughly one-fifth of the world’s oil passes through the Strait of Hormuz every day. Right now, that artery is blocked.
How large is the disruption? Goldman gives a number: 17 mb/d (million barrels per day).
For context: when the Russia–Ukraine War broke out in 2022, the global market was already rattled by Russian production cuts. At the peak, the supply shock was roughly 1 mb/d.
What we’re looking at now is 17 times that.
What about rerouting? Saudi Arabia and the United Arab Emirates have two pipelines that could theoretically divert around 3.6 mb/d. In practice, only 0.9 mb/d is currently flowing through them.
The remaining gap? No one has a clear answer.
Frankly, this isn’t a case of “tight supply.” This is closer to having the system’s main artery squeezed shut.
Brent Crude Oil is currently trading around $110. Goldman has revised its 2026 model price from $60 to $76.
But the key point isn’t that number.
The real point is this: even using $76 in their model, Goldman’s calculated EPS comes out 38% higher than the current market consensus.
So what price is the market implicitly using? Roughly a bit above $60—which means consensus is still living in a world from three months ago.
That’s where the opportunity lies.
It’s like going to a wet market where pork prices have already risen, but the supermarket labels haven’t been updated yet. That price discrepancy—that lag—is the window.
Looking at specific companies, I think $Royal Dutch Shell PLC(RDS.A)$ Shell plc and $BP PLC(BP)$ are currently the clearest plays.
Shell has direct exposure to Qatar’s QatarGas 4 project and the Pearl GTL complex. Goldman raised its target price from $87 to $99. With the stock currently around $83, that implies roughly 19% upside.
For BP, the target price was lifted from 490p to 540p, implying about 10% upside. Both companies carry Buy ratings.
Meanwhile, TotalEnergies actually has the largest regional exposure. Its upstream dependence across Qatar, the United Arab Emirates, and Iraq totals roughly 24%.
Yet Goldman assigns it a Neutral rating.
Frankly, that’s not contradictory. Large exposure means it’s both a beneficiary and a victim. If the blockade persists, its own production could be directly disrupted. Goldman’s implicit message is probably: this is a heavy card to hold—many investors may not have the risk tolerance for it.
Another angle many people haven’t noticed: refining.
The Middle East doesn’t just export crude—it also exports diesel and jet fuel.
In 2025, the region supplied 23% of Europe’s jet fuel demand. Now that supply chain is disrupted. European jet fuel crack spreads have surged more than 50% recently, while diesel spreads are up about 25%.
Air travel demand hasn’t collapsed. Meanwhile, inventories are being drawn down at the fastest pace since September 2021.
Among refiners, Repsol and Galp Energia have the highest sensitivity to refining margins. That’s a separate profit lever, independent of crude prices themselves.
That said, Goldman also did something that seems slightly contradictory.
They raised EPS forecasts by 55%, but cut valuation multiples at the same time.
For example:
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BP’s EV/DACF multiple was reduced from 5.5x to 4.7x
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TotalEnergies’ multiple fell from 7.3x to 6.3x
Why assign lower valuation multiples even as earnings surge?
Because these profits are fragile. They are driven by a geopolitical risk premium, which could disappear overnight if a ceasefire agreement is reached.
Institutions generally refuse to assign high multiples to profits of that nature. That’s part of their discipline.
As a result, target price increases are much smaller than the EPS upgrades.
For 2026, Goldman’s forecasts are 38% above consensus.
For 2027, they are only 12% above consensus.
That convergence rate says everything.
Even Goldman appears to believe this is a high-intensity but short-duration shock. In other words, not the beginning of a new supercycle, but rather a violent short-pulse event.
The problem is that no one knows how long this pulse will last.
If a ceasefire signal emerges this week, TTF Natural Gas Futures could fall from €63/MWh back into the €40s, Brent Crude Oil would likely retrace quickly, and the entire narrative would reverse.
If not, $120 Brent could easily print this week.
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