Goldman Sachs Lifts Oil Price Forecasts on Persistent Middle East Tensions

Goldman Sachs has raised its price forecasts for Brent and WTI crude oil, anticipating that geopolitical disruptions to shipping in the Middle East will persist into next year. In a note published Sunday, the bank's strategists said markets are increasingly pricing in a prolonged conflict.

Higher Prices Expected Through 2027

The Goldman Sachs team, led by Daan Struyven, lifted its price targets for both major crude benchmarks. The bank's new forecasts include:

• December 2026: Brent raised by $5 to $85 per barrel; WTI raised by $5 to $80 per barrel.
• 2027 Average: Brent at $80 per barrel; WTI at $75 per barrel.

Analysts noted that market indicators reflect growing concern, with Brent spot futures recently climbing to $97 per barrel. Furthermore, the options-implied probability of Brent crude surpassing $100 by March 2027 has surged to approximately 25%, up from just 6% a month ago, according to the bank.

Moderating Factors and Inventory Levels

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Despite the upward revision, Goldman Sachs described its upgrade as "modest." The strategists pointed to two key reasons for this caution: a smaller-than-expected deficit and the assumption that Middle Eastern supply will adapt.

OECD commercial oil inventories, a critical driver of prices, have "barely drawn since the war began," the note stated. The bank also assumes that Middle East production will gradually recover by the second half of 2027 as new pipelines become operational. Analysts also noted that price-sensitive crude imports by China remain down about 30% year-over-year, which is expected to moderate price upside.

Significant Risks Remain

Goldman Sachs emphasized that risks to its forecast are "significantly tilted to the upside on net, especially near-term." The bank outlined a scenario where intensified shipping attacks in the Strait of Hormuz and the Red Sea could cause 2027 average Gulf output to remain 4 million barrels per day below pre-war levels.

In such an upside case, Brent crude could exceed $120 per barrel. Conversely, a downside scenario exists where Brent could fall into the $60s in 2027 if Gulf output recovers to 1 million barrels per day above pre-war levels.