Goldman Sachs CEO Solomon Warns Iran Conflict Could Push Oil Prices to $170
Goldman Sachs CEO David Solomon stated that if the Iran conflict escalates significantly, crude oil prices could soar to $170 per barrel.
In a baseline scenario, oil prices are expected to range between $80 and $100 over the next 3-6 months, with Brent crude currently around $95. Solomon made this warning during an interview at the Paley Center.
Energy traders and investors are accelerating purchases of crude oil futures and related derivatives, shifting funds from risk assets to commodity hedges. U.S. shale oil producers and alternative suppliers in the Middle East stand to benefit, while global aviation, transportation, and consumer-importing countries are under pressure.
Source: Public Information
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David Solomon has previously assessed geopolitical risks publicly since the early stages of the Iran conflict. This warning of $170 continues Goldman Sachs' shift from baseline macro forecasts to extreme scenario simulations. Earlier, during the 2022 Russia-Ukraine conflict, Goldman also quickly raised oil price expectations and guided clients to hedge.
On the capital path, Goldman is mobilizing its commodity research team and trading department to guide institutional clients to increase energy positions and options protection. The strategic motive is to enhance volatility income through public warnings while expanding energy investment banking business in a high oil price environment, directing resources towards defensive asset allocation.
Similar to Goldman’s prediction path after oil prices surged to $120 in the early stages of the Russia-Ukraine conflict, or scenario analysis during the 1970s oil crisis, the global energy market is currently transitioning from geopolitical stability to high-volatility conflict pricing. Major investment banks have significantly increased their control over price narratives.
Essentially, this represents a transfer of pricing power: the uncertainty of geopolitical conflicts shifts oil price control from OPEC+ production agreements to military and maritime events. The mechanism involves potential disruptions in the Strait of Hormuz amplifying supply shock premiums, forcing the market to shift from fundamental supply and demand to risk premium pricing, accelerating capital concentration towards energy-producing countries, sovereign funds, and institutions like Goldman Sachs that have scenario hedging capabilities.
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The milder the baseline oil price, the more lethal the extreme scenario warnings become; the market always pays upfront for tail risks. With each day of conflict escalation, the oil price ceiling rises a notch, and supply chain vulnerabilities determine the final cost. The sooner investment banks draw the $170 line, the faster capital shifts from growth stocks to commodity defenses.