Goldman Sachs has lifted its oil price outlook for 2026, warning that mounting geopolitical tensions around the Strait of Hormuz are pushing crude markets into a more fragile and risk-sensitive phase, with the potential for sharp price spikes if supply disruptions persist.

In a note issued late Sunday, the bank raised its forecast for Brent crude to an average of $85 per barrel in 2026, up from $77, while West Texas Intermediate (WTI) is now seen averaging $79, compared with an earlier $72 estimate. The revisions reflect what Goldman described as “extended disruptions” to crude flows through one of the world’s most critical passage chokepoints, alongside a resurgence in precautionary stockpiling by governments.

At the center of the bank’s outlook is the Strait of Hormuz, a narrow passage that carries roughly a fifth of global oil consumption. Sustained constraint there has historically translated into immediate price volatility, but Goldman’s latest assessment suggests the market is beginning to price in not just disruption, but duration.

“The price when uncertainty peaks may be $135/bbl if the market required a risk premium to generate precautionary demand destruction offsetting supply destruction over six months,” the bank said, outlining a severe but plausible scenario involving “10 weeks of very low flows” and around 2 million barrels per day of persistent production losses.

That framing points to a market dynamic where prices are no longer reacting solely to actual supply losses, but to the anticipation of scarcity. Traders, in effect, are being forced to price in insurance against a worst-case outcome, driving what Goldman calls a “risk premium” into futures contracts.

In the near term, the bank expects Brent to average $110 per barrel through March and April, significantly higher than its previous $98 projection, as uncertainty over the scale and duration of disruptions intensifies. The adjustment reflects a market that is tightening faster than previously expected, with inventories offering a limited buffer against shocks.

Goldman outlined two primary upside risks. The first involves a prolonged disruption through Hormuz that could push Brent beyond its 2008 record highs, a level reached during a very different market structure but one similarly defined by supply anxiety. The second centers on sustained production losses in the Middle East of around 2 million barrels per day, a scenario that would materially tighten global balances and test the responsiveness of alternative suppliers.

Yet the bank’s outlook is not unidirectional. It cautioned that any de-escalation in U.S. military activity in the region could quickly unwind the risk premium currently embedded in prices. A sudden easing of tensions would likely trigger a rapid recalibration in futures markets, exposing how much of the current pricing is driven by geopolitical fear rather than physical shortages.

Another variable lies in Washington’s potential policy response. Goldman noted that any move by the United States to restrict oil exports, a step occasionally floated in times of domestic price pressure, could widen the spread between Brent and WTI. Such a divergence would mark the segmentation of global and domestic markets, with international benchmarks reacting more acutely to supply risks.

Beyond the immediate turbulence, Goldman’s medium-term view is more measured. The bank expects Brent and WTI to settle at around $80 and $75 per barrel, respectively, through 2027, as higher prices incentivize additional supply while simultaneously tempering demand growth. In this balancing act, the rebuilding of strategic petroleum reserves, drawn down in recent years, emerges as a countervailing force, tightening markets even as production responds.

“The easing effect from the price response of supply and demand roughly offsets the tightening effect from countries rebuilding their strategic oil reserves,” the bank said.

Market pricing on Sunday pointed to a degree of caution rather than panic. Brent crude futures edged down 8 cents to $112.11 per barrel, while WTI slipped 6 cents to $98.17, suggesting that traders are still weighing the probability of worst-case scenarios against the possibility of diplomatic containment.

That balance may prove increasingly difficult to maintain. Geopolitical rhetoric has continued to escalate, with Iran warning it could target the energy and water infrastructure of Gulf neighbors if the United States proceeds with threats to strike its electricity grid. The statement followed remarks by U.S. President Donald Trump, indicating potential action within a 48-hour window, raising the risk of a direct confrontation that could spill into energy markets.

For oil-importing economies, including many in Africa, the implications are serious. Higher crude prices feed directly into fuel costs, transportation, and inflation, compounding existing economic pressures. The upside is tempered by uncertainty for oil producers: elevated prices may boost revenues, but volatility complicates planning and investment.

Global markets swung sharply on Monday after Donald Trump said the United States and Iran had held “productive” discussions on ending hostilities, offering the first hint of a possible de-escalation in a conflict that has roiled energy markets for weeks.

Oil prices reacted immediately. U.S. West Texas Intermediate crude fell about 8% to near $90 a barrel, while Brent crude dropped a similar margin to around $102, reversing part of the surge that had pushed prices above $100 amid supply disruptions. Equities followed, with investors moving back into risk assets as the prospect of easing tensions reduced fears of prolonged energy shocks.

At the opening bell, the S&P 500 rose 1.48% to 6,602.60, the Dow Jones Industrial Average climbed 1.78% to 46,386.97, and the Nasdaq Composite gained 1.66% to 22,005.85. Bond markets also steadied, with the 10-year U.S. Treasury yield easing slightly to 4.37% after weeks of upward pressure driven by inflation fears linked to higher energy costs.

The rally marked a break in sentiment after nearly a month of sustained volatility. In his post, Trump said the discussions were aimed at a “complete and total resolution of our hostilities in the Middle East,” adding that he had ordered a five-day pause on planned strikes against Iranian energy infrastructure, contingent on the outcome of ongoing talks.

The announcement, however, was quickly met with skepticism. Tehran has not confirmed that any such talks took place. State broadcaster Islamic Republic of Iran Broadcasting said: “Trump, fearing Iran’s response, backed down from his 48-hour ultimatum,” casting the development as a unilateral retreat rather than a negotiated step.

Markets appeared to share that caution. Oil prices partially rebounded later in the session, with Brent climbing back toward $105 a barrel. Chris Beauchamp of IG said the recovery suggested investors remain unconvinced that a durable breakthrough is imminent, pointing to unresolved risks around the Strait of Hormuz and the possibility of further strikes.

The waterway remains central to the crisis. With shipping effectively disrupted through the strait, which handles about 20% of global oil and liquefied natural gas flows, analysts estimate that between 7 million and 10 million barrels per day of Middle Eastern supply has been knocked offline. Fatih Birol described the situation as more severe than the oil shocks of the 1970s.

Even the hint of diplomatic movement was enough to trigger a sharp repositioning across markets. Lower crude prices ease inflation concerns, which in turn reduces pressure on central banks to tighten policy. That dynamic has been a key driver of volatility in recent weeks, with investors oscillating between fears of energy-driven inflation and hopes for policy support.

Marko Kolanovic, JPMorgan’s former quant chief, said Trump’s post is “net negative for markets.”

“Manipulation will cause liquidity to disappear and real problems will stay,” he wrote on X.

The conflict has already forced the U.S. to relax sanctions on Iranian and Russian oil to ease supply constraints, while major importers in Asia, including India and China, are exploring ways to secure additional crude. China Petroleum & Chemical Corp has reportedly sought permission to tap state reserves rather than re-enter the Iranian market directly.

Disruptions elsewhere have compounded the strain. In Russia, loadings at the Ust-Luga port resumed after a drone alert, but nearby Primorsk remains shut following airstrikes. In Libya, the El Feel oilfield has been offline due to pipeline issues, further tightening supply in an already constrained market.

Central banks are now navigating an increasingly uncertain outlook. Federal Reserve Governor Stephen Miran said it was too early to assess the full inflationary impact of the energy shock, but maintained that rate cuts may still be needed to support the labor market. In contrast, the Bank of Japan is weighing potential policy adjustments as rising import costs and a weaker yen add to inflationary pressure.

The divergence highlights the uneven global impact of the crisis. While lower oil prices on Monday offered temporary relief, the underlying drivers of volatility, geopolitical risk, disrupted supply chains, and uncertain policy responses remain unresolved.

For investors, the reaction to Trump’s comments underscores how sensitive markets have become to any signal of de-escalation. Yet the quick rebound in oil prices and conflicting narratives from Washington and Tehran point to a deeper uncertainty.

The prospect of an off-ramp has lifted sentiment, but without confirmation from both sides or a clear framework for negotiations, markets are likely to remain reactive rather than convinced.

The Securities and Exchange Commission has quietly shut down its long-running investigation into Faraday Future Intelligent Electric without bringing any enforcement action against the electric vehicle startup or its executives, including founder Jia Yueting, according to multiple people familiar with the case who spoke to TechCrunch.

The closure, confirmed to Faraday Future and those involved just last week, ends a nearly four-year inquiry that began in the spring of 2022. At its core, the SEC examined whether the company made misleading statements during its 2021 SPAC merger and whether early deliveries of its flagship FF 91 luxury SUV in 2023 amounted to legitimate sales or were staged for appearances.

The decision marks a rare escape for a target that had received formal Wells Notices last July, warning that SEC staff intended to recommend charges for violations of federal anti-fraud provisions. A 2020 study from the Wharton School found that roughly 85 percent of Wells Notice recipients ultimately faced enforcement action. In this instance, the agency stepped back entirely.

Faraday Future said in a statement over the weekend that the SEC had informed the company it would take no action against it or any of its executives.

Jia, who has steered the company through repeated near-death experiences, responded with visible relief: “We can now put all our energy into strategy execution. Over the past five years, we had to spend a great deal of time, effort, and money on cooperating with the investigation.”

The investigation traced back to the chaotic period surrounding Faraday Future’s public listing. The company, founded in 2014 by Jia during his LeEco conglomerate days in China, positioned itself as a Tesla rival. It drew talent from Tesla, Apple, and other heavyweights and unveiled a flashy concept at the 2016 Consumer Electronics Show. But cash ran out quickly. By late 2017, the company was laying off workers, and Jia was fleeing to California after LeEco’s collapse left him on China’s debtor blacklist.

An investment from Chinese real estate giant Evergrande provided a temporary lifeline before that partnership also fractured. Jia nominally stepped down as CEO in 2019 while filing for personal bankruptcy to settle LeEco debts he had personally guaranteed. Behind the scenes, though, he retained significant influence.

When Faraday Future completed its SPAC merger in 2021 and raised roughly $1 billion, the new public board grew suspicious about Jia’s actual control and related-party transactions, including multimillion-dollar loans from low-level employees tied to him. A special committee hired outside lawyers and forensic accountants. Their findings were shared directly with the SEC, triggering the formal probe in March 2022.

Between January and April of that year, Jia was sidelined, co-CEO Matthias Aydt was placed on probation, and Jia’s nephew, Jerry Wang, was suspended. Wang later resigned for failing to cooperate, but has since returned to the company.

The SEC also scrutinized the first handful of FF 91 deliveries in early 2023. Former employees alleged in lawsuits that those were not genuine sales but rather internal arrangements meant to create the appearance of revenue. Subpoenas and depositions followed, with some former executives and employees sitting for extended interviews in 2024 and into 2025.

The Department of Justice requested information from Faraday Future shortly after the SEC opened its case, though the DOJ has never publicly confirmed opening a full criminal investigation.

The closure fits a pattern. The SEC examined nearly every electric vehicle startup that went public through SPAC mergers in the early 2020s. Most ended in settlements. The agency dismissed its probe into Lucid Motors in 2023 and, as previously reported, closed its investigation into bankrupt EV maker Fisker late last year.

Faraday Future, however, has continued to struggle with execution. Production of the high-priced FF 91 has remained minimal. In recent months, the company has pivoted toward importing more affordable hybrid and electric vans from China, selling re-badged Chinese-built robots, and converting a publicly traded biotechnology shell into a crypto-focused entity.

On Friday, the company disclosed that Nasdaq had issued a warning: its share price had fallen below the $1 minimum bid requirement, raising the possibility of delisting if it cannot regain compliance.

What the Closure Means

The end of the SEC investigation removes a significant legal cloud that had hung over Faraday Future for years. For Jia, who has survived multiple corporate collapses and personal financial ruin, it means another narrow escape and a chance to refocus on operations without the constant distraction of subpoenas and depositions.

Many doubt that the SEC’s decision can translate into sustainable sales and a viable business model for the company. The EV market has grown brutally competitive, capital remains expensive, and Faraday Future’s track record of overpromising and underdelivering has left many investors skeptical.

However, the decision pinpoints a shift from the SEC’s aggressive scrutiny of SPAC deals during the 2020-2021 boom. Many of those once-hyped startups have since faded, restructured, or disappeared entirely. Faraday Future now joins the small group that managed to walk away from a lengthy federal probe without formal charges.