Goldman Sachs: The Markets
2026-05-11 · Hosted by — · Goldman Sachs
Executive Summary
Chris Hussey speaks with Jerome Dortmans, co-head of global oil and products trading at Goldman Sachs, about how to trade oil after the spike to ~$120/barrel futures (cash above $170) at the start of the conflict in March, followed by a ~$20 retracement on the ceasefire. Dortmans sees a binary near-term setup: a memo-signed path leads to a sell-off but unlikely below $80-85, while re-escalation could quickly reprice the cash markets even higher than March. The market is currently trading between $95-105. Demand destruction has materialized in Asia (3-5 million barrels/day estimate) but not yet in developed markets. Refined products — especially jet fuel and NAPA — are tighter than crude; the recommended posture is to shift from a directional to a relative-value trade.
Key Stories & Changes
1. Oil Price Action Since the War Began
Futures spiked to ~$120/barrel at conflict start in March.
Cash markets traded above $170/barrel at peak.
Since then: SPR releases, refinery run curtailment, demand destruction and policy shifts on sanctioned barrels compressed cash to futures.
April brought a ceasefire — risk premium for further infrastructure damage taken out.
Currently trading $95-105/barrel range with spikes on confrontational headlines.
2. Binary Near-Term Setup
If memo NOT signed within 24 hours / re-escalation: cash markets must re-escalate; broader/hotter market in the east plus futures and refined products in the west (heading into summer demand season).
If memo signed: 30 days for the market to decide on a meaningful peace deal; expects a sell-off but NOT materially below $80-85.
Even with a peace deal, opening of the Strait won’t be smooth — Dortmans does not expect a “flooding of barrels” leaving the region.
Three months expected before bearish scenarios start pricing in; six to nine months for full normalization.
3. Demand Destruction Snapshot
Asia: meaningful — petrochemical run curtailment, rationing, work-life balance changes in Southeast Asia.
Developed markets: NOT yet seeing meaningful demand destruction (U.S. or Europe).
Market estimate: 3-5 million barrels/day of total oil demand destruction so far.
Refineries in Asia back to higher runs because of strategic reserve releases.
4. Refined Products — Jet Fuel and NAFTA
Loss of Middle East supply meaningful, especially for the European jet market.
Refining industry shifting yields to maximize jet — creates bottlenecks in NAFTA and diesel.
European strategic stocks: sufficient for “quite an extended period of time.”
Likely some flight curtailments of uneconomic routes.
Summer environment: refined products may trade at higher levels even if crude normalizes.
5. Positioning Shifts
Investor community since the ceasefire has been more positioned to the downside.
Macro players unwinding long oil hedges.
Producer-side hedging activity is picking up — first time since April, signaling expectation of resolution.
Consumers ceased hedging in March at the spike but expected to return at the lower levels.
Trends Identified
1. From Directional to Relative-Value Market
Dortmans’ core thesis: the directional macro trade in oil is winding down. Stock-level damage is sufficient that refined products will need to compete for crude going into Western Hemisphere summer demand. The trade migrates from “long Brent” to spread trades across light ends, gasoline, NAFTA and diesel.
2. Asymmetric Geographic Demand Destruction
The bifurcation between Asian demand destruction (significant) and developed-market demand resilience (no meaningful destruction) shapes the global supply-demand balance. This means OPEC and producer responses must navigate two different demand worlds simultaneously.
3. Producer Re-Entry Signal
Producer hedging activity returning after the ceasefire is “the biggest change since April” per Dortmans. This is a leading indicator that supply expectations are softening on the producer side, which historically caps further price spikes.
4. Refinery Bottleneck Risk
Even if crude opens up, refinery damage assessment is unknown. Solving the jet fuel problem creates NAFTA and diesel bottlenecks. The relative-value trade is structurally easier than the directional one. —-
Sentiment Analysis
Overall Market Sentiment: Cautiously Negotiation-Constrained
Markets believe the ceasefire is more likely to hold than not, but the binary risk around the memo signing keeps positioning tactical and short-dated.
Risk Factors Highlighted
Memo not signed / re-escalation — would push cash markets back to or above March highs.
Refined product bottlenecks — even if crude opens, jet/NAFTA/diesel structurally tight.
Slow Strait reopening — no “flooding” of barrels expected even in best case.
Refinery damage unknown — full normalization could take 6-9 months.
Asian demand destruction expanding — if it deepens, could change pricing dynamics globally.
Strategic reserve depletion — SPR releases have helped but are not unlimited.
Summer demand season in West — refined product tightness ahead of peak driving/cooling season.
This episode was covered in today’s The Market Signal — 2026-05-11, a cross-source synthesis of multiple podcast reports.