“NACHO trading” is rampant! After Goldman Sachs, Bank of America also believes that oil prices will remain high at $90 this year.

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After Goldman Sachs raised its year-end oil price forecast a few weeks ago, Francisco Blanch, Head of Commodity and Derivatives Research at Bank of America, has also joined the camp, predicting that Brent crude oil will remain near $90 this year. As the stalemate in the Strait of Hormuz continues, the “Hormuz Will Absolutely Never Open” (NACHO) trading strategy is gaining momentum on Wall Street.

In an interview with Bloomberg on Monday, Blanch warned that the global oil market is currently facing a “substantial supply gap,” with daily shortages of 14 to 15 million barrels, equivalent to a demand gap of 14% to 15%. He stated that only by filling this gap can oil prices potentially fall back to the $60–$70 per barrel range. On Monday afternoon, Brent crude futures climbed above $112.

Blanch’s latest forecast is based on the core assumption that the Strait of Hormuz will remain blocked. He also issued a more severe warning: If a double blockade persists, oil prices could gradually rise to $120–$130 per barrel between late June and early July. This prospect is causing widespread concern in the market over fuel supplies for the US summer driving season.

Wall Street Consensus: $90 as Year-End Benchmark Forecast

Goldman Sachs analysts were the first to raise their fourth-quarter oil price forecast in late April, setting Brent crude’s target at $90 and West Texas Intermediate (WTI) at $83, almost $30 higher than predictions before the Hormuz crisis. Bank of America’s follow-up further cements this price expectation as a consensus among major institutions.

The logic of the two institutions’ forecasts is highly consistent: the Hormuz crisis is unlikely to be resolved in the short term and global oil supply will remain under pressure. Blanch pointed out that resuming tanker passage is the best outcome, but as it stands, the Trump team has no willingness to make any concessions to Tehran; the stalemate has lasted several weeks.

Critical Point Approaching: Multiple Warnings June May Be the “Flashpoint”

Several institutions and industry insiders consider June as a key window for market direction. Frederic Lasserre, Head of Research at Gunvor, one of the world’s largest oil traders, warned last week that, "The flashpoint is clearly June, by then there must be a breakthrough."

JPMorgan analysts have also recently warned that if the Strait of Hormuz remains closed for another four weeks, the world will face a catastrophic cliff-edge oil shortage. Vincent Clerc, CEO of Maersk, has called the long-term blockade of Hormuz a “new warning,” believing it could cause serious disruption to global trade.

Helima Croft, former CIA officer and Head of Commodities at RBC, recently told clients she is highly skeptical that a full reopening or tanker flow returning to February 27 levels can be achieved in June, indicating an extremely low likelihood of an imminent reversal.

Demand Under Pressure: US Gasoline Prices Near Demand Destruction Threshold

The tension on the supply side has begun to transmit to end consumers. According to the latest data from the American Automobile Association (AAA), the US national average price for 87-octane unleaded gasoline has reached $4.55 per gallon. Analysts indicate that if the Hormuz crisis is not resolved soon, further oil price increases may push gasoline prices close to the $5 per gallon “demand destruction” threshold, coinciding precisely with the US Memorial Day driving season.

Blanch specifically warned that the US may see “tight fuel supplies” this summer. Given the current supply-demand gap, any further deterioration in geopolitical circumstances could accelerate oil prices breaking into higher ranges.

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