The global energy crisis created by the Iran war has pushed oil to levels not seen in years and the end is not yet in sight. International benchmark Brent crude oil closed at $112.19 per barrel on Friday, reflecting the profound disruption to global energy supplies caused by the near-total closure of the Strait of Hormuz. In a sobering assessment that rattled markets, Goldman Sachs suggested that higher oil prices could persist all the way through 2027, a projection that has serious implications for the global economy, inflation and the cost of living for ordinary people everywhere.
Why Prices Are This High
The Strait of Hormuz has been effectively closed to commercial shipping for most of the past three weeks. During peacetime roughly 20 percent of all the world’s oil and gas passes through this narrow channel. The near-total halt of tanker traffic through the strait has created a supply shock of historic proportions. Middle Eastern oil producers have seen their output fall dramatically because they cannot export crude that has nowhere to go. More than three million barrels per day of refining capacity in the region has already shut due to attacks and a lack of viable export outlets.
Goldman Sachs Warning
Goldman Sachs analysts said the more favourable scenario involves a gradual recovery in oil flows through the strait from April, which could ease Brent crude prices back toward the seventies by the fourth quarter of 2026. However the bank warned that if the conflict continues or intensifies the higher price environment could persist well into 2027. That scenario would represent an enormous sustained cost to the global economy and a major political liability for governments trying to manage inflation and economic growth.
Impact on the UAE Economy
For the UAE the oil price dynamics are complex. Higher oil prices theoretically benefit an oil-producing nation but the physical closure of export routes and the damage to energy infrastructure in the region creates offsetting losses. UAE oil production has dropped by between 500,000 and 800,000 barrels per day due to the conflict. ADNOC shut its Ruwais refinery following drone strike damage. The economic calculus is deeply unfavourable despite the headline price gains.
For business news on how companies are adapting read our coverage of global companies expanding in Dubai in 2026.
Source: CNN Business, Goldman Sachs, IEA, Fortune, Bloomberg
