Goldman Sachs Warns Brent Crude Oil Could Break Through $120: How the Energy Crisis Could Impact Bitcoin and Federal Reserve Policy?

On July 20, 2026, the global crude oil market closed amid wild fluctuations. Brent crude oil futures settled at $89.22 per barrel, up 1.27%; WTI crude settled at $83.23 per barrel, up 0.9%. During the day, Brent crude once surged to $91.42—this marked the first time oil prices have broken through the $90 level since the escalation of the Iran-U.S. conflict. As of July 21 Beijing time, according to Gate market data, WTI crude (CL) latest quoted at $81.95, down 2.21% over the past 24 hours; its price fluctuated in a range of $79.59 to $84.11, with 24-hour trading volume reaching $10.3571 million. Brent crude (BZ) was $86.47, down 2.23% over the past 24 hours; trading ranged from $84.36 to $88.64, with trading volume of about $6.89M. Natural gas (NG) showed relatively stable performance: latest price was $2.858, up 0.11% over the past 24 hours; its fluctuation range was $2.816 to $2.872.

Behind these price swings is the world’s most important energy artery—the Strait of Hormuz—which is facing an unprecedented passage crisis. In a report published on July 20, Goldman Sachs warned: if the chaos in the Strait of Hormuz continues, Brent crude could rise to above $120 per barrel in the fourth quarter. This is not Goldman’s baseline expectation—the firm’s current baseline forecasts are $80 for Brent in the fourth quarter and $75 in 2027—but the re-pricing of the risk premium has already changed the market’s pricing logic.

For the crypto market, the transmission chain of this energy crisis is far more complex than the traditional narrative of “war benefiting safe-haven assets.” How does a rise in oil prices affect the policy path of the Federal Reserve? Is the “digital gold” narrative for Bitcoin being covered over by short-term liquidity pressure? This article will analyze from four levels.

The Strait of Hormuz: The “throat” of the global energy supply chain is tightening

The core starting point of Goldman Sachs’ warning is the sharp rise in shipping risk through the Strait of Hormuz.

This narrow waterway between Oman and Iran usually carries about one-fifth of global oil trade volume. However, as the military conflict between the U.S. and Iran continues escalating, the number of vessels transiting the strait has been dropping at an astonishing pace.

According to Lloyd's List Intelligence data, in the week up to July 20, the strait recorded only 53 vessel transits, down 66% from 157 in the prior week. The number of tanker and LNG carrier transits—responsible for transporting most Gulf crude and liquefied natural gas—fell from 90 to 30. Kpler data shows that average daily transits for vessels over 20 crossed before July 15 fell to 16 on July 15, and further dropped to single digits on July 16. Saul Kavonic, head of energy research at MST Marquee, estimated that the flow through the Strait of Hormuz has dropped to about 15% of pre-war levels.

The immediate cause of the sharp fall in vessel transits is the escalation of military action. The United States announced a naval blockade of Iranian ports, while Iran claimed attacks on vessels that violate navigation rules in the Strait of Hormuz. On July 21, Iran’s Islamic Revolutionary Guard Corps issued a statement saying two oil tankers attempting to pass through the “dangerous route” in the Strait of Hormuz exploded and caught fire. Meanwhile, the Houthis announced they would impose a maritime blockade on Saudi Arabia, further intensifying the risk of regional energy transportation.

Goldman Sachs analysts pointed out that Gulf crude oil flows have been estimated to fall to below 45% of pre-war levels. This number implies that the global oil market could lose millions of barrels of supply per day. More importantly, the global inventory buffer is declining too—Goldman said that the decline in global inventories in the second quarter makes the oil market more vulnerable to supply shocks. When a supply shock occurs, the market lacks sufficient cushion to absorb volatility, meaning prices will be more sensitive to any marginal changes.

From oil prices to interest rates: How the energy shock rewrites the Fed’s policy playbook

The most central trading logic in the market over the past two years can be simplified into a chain: falling inflation → Fed rate cuts → risk assets rise. The rebound in the crypto market in the first half of 2026 is largely built on this expectation.

But the energy crisis is rewriting this script.

The risk of an inflation rebound is building. The minutes of the Fed’s June meeting show that all members agreed to keep the target range for the federal funds rate at 3.5% to 3.75%. However, concern about inflation among decision-makers has intensified further, with a few officials believing there were reasons to raise rates in June. The signal released by the meeting minutes has changed: the Fed has placed controlling inflation again in a higher priority position and kept the policy option to raise rates further if necessary.

Former New York Fed chair Dudley recently wrote that even if the argument for raising rates in the near term weakens, maintaining a tighter monetary policy still has multiple logical supports: core inflation indicators are in the range of 2.4% to 3.3%, requiring restrictive policy adjustments due to a mismatch between dual policy goals; the federal funds rate has been kept high for nearly four years, but the financial conditions index shows the current environment’s stimulus intensity has reached levels comparable to the zero-rate period at the start of 2022. Dallas Fed chair Logan also publicly called for higher rates, saying inflation does not appear to be sustainably returning to the central bank’s 2% target.

If oil prices keep rising, it will directly hit inflation expectations. As Brent crude climbs from around $89 toward $120, higher energy costs will transmit into broader price levels. Goldman Sachs economists said the breadth of price increases is significantly widening; inflation is no longer limited to individual industries and is showing a “diffusion” trend.

For risk assets, that means triple pressure:

First, rising U.S. Treasury yields. Warming inflation expectations will lift nominal rates, especially on the long end. Second, a stronger U.S. dollar. Keeping rates high—or even expectations of renewed hikes—will attract capital into dollar assets. Third, global liquidity tightening. A stronger dollar combined with rising Treasury yields will jointly compress valuation space for global risk assets—technology stocks, AI-related stocks, and crypto assets that are highly sensitive to liquidity will be hit first.

UBS expects the Fed to keep rates unchanged at its meeting on July 28 to 29, and to hold steady for the rest of 2026. But this “hold steady” by itself means the previously expected rate-cut path has been completely broken. The shift from “rate-cut expectations” to “rate-hike risks” is the most essential macro impact on risk assets.

Bitcoin’s short-term predicament: When “digital gold” meets a liquidity headwind

On July 21, Bitcoin regained the $65,000 level, briefly touching $65,788 intraday, with a roughly 0.9% gain over the past 24 hours. However, compared with its historical peak of nearly $126,200 in October 2025, it has fallen about 50%. Amid the macro headwind triggered by the energy crisis, Bitcoin’s near-term trajectory faces substantial pressure.

Bitcoin still has strong risk-asset attributes in the present. In April 2026, Bitcoin’s 30-day rolling correlation with the Nasdaq 100 briefly reached a historical peak of 0.96—almost implying that the two move completely in sync in statistical terms. Although that coefficient had fallen to nearly zero by early June, Bitcoin’s pricing framework as a “high-beta asset” has not been fully overturned. Standard Chartered analysts think Bitcoin’s correlation with the Nasdaq index is about 0.5.

Cash-flow direction provides more direct evidence. U.S. spot Bitcoin ETFs recorded net inflows of $75.7 million in the week ending July 17, ending the prior eight straight weeks of total net outflows exceeding $8.2 billion. On July 20, net inflows on a single day were about $227 million. Although recent inflows have recovered somewhat, U.S. spot Bitcoin ETFs’ cumulative net outflows year-to-date in 2026 still total about $5.4 billion. In the week of July 13, investors withdrew $424.7 million from ETFs in a single day under the shock of geopolitical conflicts—this clearly shows how geopolitical risk transmits into the crypto market through institutional behavior.

Bitcoin’s short-term impact from the energy crisis can be understood through the following chain:

Energy crisis → Oil prices rise → Inflation expectations heat up → Rates stay high or even renewed hikes → Dollar liquidity tightens → Risk assets under pressure → Increased short-term volatility for Bitcoin

In this transmission chain, Bitcoin is not being bought as a “safe-haven asset,” but sold as a “high-beta risk asset.” When institutional investors face liquidity tightening, the first assets they often cut are precisely this kind.

Long-term narrative divergence: Can the energy crisis strengthen BTC’s value proposition?

There is a clear split between short-term liquidity pressure and long-term value narratives.

In the short term, Bitcoin faces a headwind of macro liquidity tightening. The Fed keeps high rates, the dollar strengthens, and Treasury yields rise—these factors together compress valuation space for risk assets. In this environment, Bitcoin’s safe-haven attribute as “digital gold” is temporarily outweighed by its “high-beta technology stock” attribute.

But in the long term, the energy crisis may actually strengthen Bitcoin’s core value narrative.

First, expectations for a widening fiscal deficit. Inflation pressure caused by the energy crisis limits the Fed’s room to cut rates; a high-rate environment means interest expenses on U.S. government debt keep climbing. A larger fiscal deficit will further weaken the credibility foundation of the dollar.

Second, growing focus on the “monetary credibility” discussion. When energy costs push inflation persistently above target levels, market confidence in the purchasing power of fiat currencies will be eroded. In this logic, gold typically benefits—since 2026 began, gold is up 9%. Bitcoin’s “digital gold” narrative gains stronger support in this macro context.

Third, increased demand for safe-haven assets. As geopolitical risks continue to heat up, global capital will reallocate—shifting from risk assets to safe-haven assets. In this framework, gold and Bitcoin are not perfect substitutes, but both benefit from the same macro trend.

A comparison of asset performance offers a clear view:

| Asset | Short-term impact | Long-term logic | | --- | --- | --- | | Dollar | Up (rate support) | Depends on inflation and fiscal path | | Gold | Safe-haven gains | Hedge against monetary credibility | | Bitcoin | Liquidity pressured | Digital gold narrative strengthened | | Energy stocks | Benefit | Tight supply supports earnings |

Bitcoin’s uniqueness is that it carries both “risk-asset” and “digital gold” attributes at the same time. In the short run, the former’s pricing logic dominates; in the long run, the latter’s narrative is building momentum. The switch point between the two depends on whether macro liquidity undergoes a turning point—and that turning point, in turn, depends on how long the energy crisis lasts.

Conclusion: Finding a pricing anchor amid uncertainty

Whether Brent crude can truly reach $120 depends on how long the chaos in the Strait of Hormuz persists. Goldman Sachs has stated clearly that $120 is not its baseline expectation—but if the current military conflict lasts for weeks, or regional energy infrastructure is directly attacked, it is not impossible for oil prices to retest $100.

For participants in the crypto market, the key is to understand the full logic chain of how the energy crisis transmits into crypto assets, rather than simply applying the old framework of “war benefiting safe-haven assets.” In the short term, Bitcoin faces valuation pressure from liquidity tightening; in the long term, inflation expectations and the monetary credibility debate triggered by the energy crisis may provide a more solid macro foundation for Bitcoin’s “digital gold” narrative.

Amid today’s uncertainty, the only thing certain is that the logic of global asset pricing is being rewritten. Understanding that process matters more than predicting the endpoint of oil prices.

FAQ

Q: What is the basis for Goldman Sachs’ prediction of Brent at $120?

Goldman says that if chaos in the Strait of Hormuz continues, Gulf crude oil flow has fallen to below 45% of pre-war levels, combined with a decline in global inventory buffers, makes the market more sensitive to supply shocks. However, $120 is not Goldman’s baseline expectation; the firm currently expects Brent at $80 in the fourth quarter.

Q: How does rising oil prices affect the Fed’s decision to cut rates?

Rising oil prices will lift inflation expectations and weaken the rationale for Fed rate cuts. The minutes of the Fed’s June meeting show that inflation concerns among decision-makers intensified, and a few officials believe there were reasons to raise rates. If energy prices keep rising, the Fed may delay rate cuts or even reconsider rate hikes.

Q: In an energy crisis, is Bitcoin a safe-haven asset or a risk asset?

In the short term, Bitcoin still shows strong risk-asset characteristics. In April 2026, Bitcoin’s correlation with the Nasdaq reached 0.96 at one point. The energy crisis transmits through the chain of “oil price rises → inflation heats up → liquidity tightens,” creating near-term pressure on Bitcoin. In the long term, the energy crisis may reinforce Bitcoin’s “digital gold” narrative.

Q: What are the biggest medium-to-long-term impacts of the energy crisis on the crypto market?

The main medium-to-long-term impacts are twofold: first, changes in the macro liquidity environment—oil-driven inflation will limit the Fed’s room for easing and compress risk-asset valuations; second, strengthening the monetary credibility narrative—widening fiscal deficits and damage to fiat currency purchasing power may push more capital to seek alternative value stores such as Bitcoin.