Goldman Sachs Lifts December Brent Crude Forecast to $85 Amid Asia Energy Rally

Goldman Sachs has raised its December price forecast for Brent crude oil to $85 per barrel, citing a sustained rally in energy prices across the Asia-Pacific region over the past several weeks.

Regional Energy Surge Drives Outlook

In a research note, the bank's commodity strategists adjusted their forecast in response to the upward trend in regional energy markets. While crude oil has not yet returned to its peak levels from March, prices for refined products have remained elevated. Notably, prices for liquefied natural gas (LNG) and diesel have reached new highs for the year.

Goldman Sachs anticipates that this price surge will become evident in the September import and producer price index (PPI) data for many economies in the region. The direct impact on consumer prices is expected to be somewhat muted due to fiscal subsidies and price controls implemented by various governments.

Geopolitical Tensions and Inflation

The revision comes amid a backdrop of tightening energy supplies in Asia, which the report links to the outbreak of a war in Iran and the subsequent closure of the Strait of Hormuz. These events have prompted upward revisions to consumer price index (CPI) inflation forecasts across the Asia-Pacific region.

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According to the bank, prior to the conflict, headline CPI inflation in most regional economies was at or below central bank targets. Currently, both headline and core CPI inflation have risen to meet or exceed those targets in a majority of the economies. However, the pass-through from higher energy costs to core inflation has been limited so far, with median core inflation rising only slightly.

Diverging Forecasts for 2027

While Goldman Sachs's regional inflation forecast for 2026 is largely in line with market consensus, its outlook for 2027 shows significant divergence for several countries. The bank's analysis points to specific differences in its inflation expectations compared to the broader market:

• Higher than consensus: Forecasts for India and Malaysia are the most elevated relative to market expectations.
• Lower than consensus: Projections for Japan, Vietnam, and the Philippines are the most below the consensus view.