Goldman Sachs’ latest oil scenarios are not a prediction that Brent will inevitably return to $120 a barrel. They are a warning about how thin the margin of safety has become.
The bank’s base case remains relatively benign: Brent averaging about $80 a barrel in the fourth quarter of 2026 and $75 in 2027, assuming de-escalation and a recovery in Persian Gulf exports. But if disruption through the Strait of Hormuz persists through 2027 and Gulf output recovers only late next year, Goldman says Brent could exceed $120 as early as the next quarter and average $100 in 2027. That is a tail risk, not the central forecast, but tail risks matter when a country imports most of the crude it consumes.
The market is already signalling that complacency is dangerous. Brent closed above $90 on July 21 for the first time in more than a month. The renewed rise followed another escalation in the US-Iran conflict and fresh threats to shipping routes. Oil is no longer reacting only to production numbers; it is pricing the reliability of tankers, ports, insurers and maritime chokepoints.
India has shown considerable agility. In the June quarter, refiners cut Middle Eastern crude imports by 27% to 1.55 million barrels per day and raised purchases from Russia and Latin America. Russian arrivals hit a record 2.64 million barrels per day in June, accounting for half of India’s 5.24-million-barrel-per-day imports. This diversification has kept refineries supplied and reduced immediate dependence on Hormuz.
But diversification is not insulation. Russian, Venezuelan, Brazilian and West African barrels travel farther, carry different freight and insurance costs, and may not always match refinery configurations. A supply route can be replaced; geography cannot. Longer voyages tie up tankers, increase working capital and raise the landed cost even when the headline crude price appears manageable.
The bigger lesson is that India should stop treating every oil shock as a temporary procurement problem. It is a balance-sheet problem for the economy. Higher crude feeds into inflation, the rupee, the current account, fuel subsidies, airline costs, freight rates and corporate margins. The first-round impact may be delayed by taxes, inventories or state-owned refiners, but the bill does not disappear. It merely moves from consumers to oil companies or the government.
The current episode also shows why demand destruction is a poor energy-security strategy. Consumption can fall when prices surge, but that adjustment comes through weaker mobility, squeezed household budgets and lower industrial activity. An economy should not have to slow merely because a narrow waterway has become unsafe.
There is also a danger in relying excessively on strategic reserves. Stock releases can calm markets and buy time, but they cannot manufacture replacement barrels. Nor can alternative pipelines provide immediate relief. Goldman estimates that seven regional pipelines under development could carry around 14 million barrels per day by end-2028, about 60% of pre-war Hormuz flows. Yet pipelines crossing several countries take years to finance, approve and build.
India’s response must therefore operate on three timelines. Immediately, refiners should keep widening crude optionality, secure tanker and insurance capacity, and avoid excessive dependence on any single discounted supplier. Over the medium term, New Delhi must accelerate strategic storage, commercial-cum-strategic caverns and overseas storage arrangements. Over the long term, electrification, efficient public transport, biofuels and domestic production must reduce the economy’s oil intensity.
The mistake would be to debate whether Brent will be $80 or $120. The real question is whether India’s macroeconomic framework can remain stable across both outcomes. Goldman’s warning should not trigger panic. It should trigger preparation.