• Goldman Sachs estimates the 10-week Strait of Hormuz closure has caused only moderate global economic disruption so far.
  • The bank's chief economist Jan Hatzius cites high oil inventories, demand shifts, and fiscal support as key cushions.
  • Goldman sees Brent potentially easing toward $90 by year-end and lowered U.S. recession risk to 25%.

A Measured Impact

Goldman Sachs has weighed in on the economic fallout from the ongoing Strait of Hormuz closure, now in its tenth week. In a note to clients, the bank’s chief economist Jan Hatzius argued that the disruption has so far resulted in only moderate global damage, defying earlier fears of a severe shock.

According to Hatzius, three factors have tempered the impact. First, oil prices did not spike as dramatically as anticipated, thanks to high global inventories and market expectations of policy intervention. Second, demand for fuel has been dampened by shifts toward renewable energy and reduced travel, easing shortages. Third, strong fiscal support, the artificial intelligence boom, and easy financial conditions have helped cushion the broader economy.

“While the closure is a serious geopolitical event, its economic consequences have been contained by structural buffers that were not present in earlier crises,” Hatzius said in the note, which was reviewed by this publication. The bank’s analysis suggests oil markets may stabilize near current levels, with Brent crude potentially easing toward $90 per barrel by year-end if the strait reopens gradually.

Risks Remain

Goldman has slightly lowered its probability of a U.S. recession to 25%, but cautioned that risks remain elevated. Weakening consumer support, higher energy costs, slower wage growth, and low savings levels continue to pose headwinds. The bank emphasized that while the current disruption is manageable, a prolonged closure could still trigger more severe outcomes.

In response to the findings, the bank’s equity strategists have maintained a cautious stance on energy-sensitive sectors. Attempts to reach Goldman for further comment were not immediately successful.

Correction: An earlier version of this article misstated the duration of the closure. It is 10 weeks, not 12.