Table of Contents
Oil Price Projections
Goldman Sachs forecasts Brent crude remaining elevated due to low Strait of Hormuz shipments for six weeks. Baseline sees $105 per barrel in March, $115 in April, dropping to $80 by Q4 2026.
Adverse Scenarios
10-week oil flow disruptions peak Brent at $140/barrel, settling at $100 by Q4 2026. Severe case with infrastructure damage reaches $160 peak, $115 end-2026.
Inflation Impacts
- Higher oil drives most US inflation via transportation costs.
- Rule: 10% oil hike adds 0.2pp to headline PCE, 0.04pp to core.
- Fertilizer limits boost food prices 1.5%, inflation 0.1pp.
- Second-round effects from expectations add 0.1-0.4pp by 2026.
Fed Policy and Growth Outlook
PCE at 2.8% headline, 3.1% core in January, above 2% target; no recent cuts. Baseline PCE hits 3.1% Dec 2026, core 2.5%; adverse 3.6%, 2.6%. GDP growth cut to 2.1% Q4 2026, recession probability 30%. Fed cuts still expected twice, but hold odds up to 25%.
