Goldman Sachs Says Hormuz Closure Had Limited Economic Impact, Sees Brent at $90 by Year-End

Goldman Sachs said the global economic fallout from the Strait of Hormuz closure was more limited than expected, while also signaling a stable outlook for energy markets.

Walter Bloomberg reported on May 11 that Goldman Sachs Chief Economist Jan Hatzius estimated the roughly 10-week closure of the Strait of Hormuz had a smaller-than-expected impact on the global economy.

High crude inventories and expectations for policy support kept oil prices from surging as much as feared, he said.

Hatzius added that changes in demand, including broader use of renewable energy and less travel, also partly eased fuel shortages.

Goldman Sachs also said aggressive fiscal support, increased investment in artificial intelligence and accommodative financial conditions helped absorb the economic shock.

Assuming a gradual normalization of traffic through the strait, the bank expects Brent crude to ease to about $90 a barrel by year-end.

Still, Goldman Sachs said the possibility of a U.S. recession remains.

The bank put the probability of a U.S. recession at 25%, slightly lower than before, while citing weaker consumer spending power, higher energy costs, slower wage growth and low savings rates as risk factors.

Markets are watching the pace of normalization in the Strait of Hormuz and the direction of oil prices for clues on the global economic outlook.