Goldman Sachs has raised its oil price forecasts as the bank expects shipping disruptions across the Middle East to remain a significant factor well into 2027. The revised outlook reflects a growing assumption that the regional conflict and related transport risks will persist longer than previously expected.
The bank increased its forecasts for both Brent crude and WTI crude by $5 per barrel. Goldman now expects Brent to reach $85 and WTI $80 by December 2026, followed by averages of $80 and $75 respectively in 2027.
Summary
Goldman Sachs raised its Brent and WTI forecasts by $5 per barrel as it incorporated the possibility of prolonged Middle East shipping disruptions into its outlook. The bank now expects Brent at $85 and WTI at $80 by December 2026, followed by $80 and $75 in 2027.
Market pricing has already become more aggressive. Brent spot futures have climbed toward $97, while the options-implied probability of Brent trading above $100 in March 2027 has risen to roughly 25%, compared with about 6% a month earlier.
Despite the higher forecasts, Goldman still sees factors that could limit the upside, including relatively resilient oil inventories, recovering Middle East production capacity and weaker Chinese crude imports. The bank nevertheless said risks remain skewed strongly to the upside, particularly in the near term.
Goldman lifts Brent and WTI forecasts
The team led by Goldman strategist Daan Struyven raised its crude price assumptions as markets increasingly price in a longer period of conflict and disruption to regional shipping.
| Period | Brent forecast | WTI forecast |
|---|---|---|
| December 2026 | $85/bbl | $80/bbl |
| 2027 | $80/bbl | $75/bbl |
The revisions represent a $5-per-barrel increase from Goldman’s previous forecasts. At the same time, current market prices already reflect substantial geopolitical risk, with Brent spot futures trading near $97 when the report was published.
Options markets are also pricing in a greater possibility of another move above the psychologically important $100 threshold. The implied probability of Brent exceeding $100 in March 2027 has climbed to around 25%, up from roughly 6% one month earlier.
Why Goldman still calls the upgrade modest
Although the bank expects disruptions to last longer, it described the forecast increase as relatively modest. One reason is that OECD commercial oil inventories have barely declined since the conflict began, suggesting that the underlying market deficit has been smaller than initially feared.
Stock draws have also been concentrated in strategic reserves, oil stored on water and inventories in China rather than in OECD commercial stocks. Goldman estimates that global landed oil inventories have fallen from approximately 9.1 billion barrels before the war to 8.6 billion barrels today, but that level remains comfortably above minimum operating requirements.
The bank also expects Middle Eastern producers to continue adapting to disrupted shipping conditions. Production could gradually recover during the second half of 2027 as additional pipeline capacity becomes available, helping reduce dependence on vulnerable maritime routes.
Chinese demand could limit further price gains
Another factor restraining Goldman’s price outlook is China. Price-sensitive Chinese crude imports remain about 30% below their year-earlier level, which could limit the ability of oil prices to rise substantially without triggering additional demand destruction.
This matters because the current market is being shaped by two opposing forces. Geopolitical risk is supporting prices, while softer demand and the ability of producers to reroute or restore supply are preventing the bank from adopting a more aggressive base-case forecast.
Upside risks remain significant
Goldman said risks to its forecast are “significantly tilted to the upside on net”, particularly in the near term.
In the bank’s upside scenario, Brent could move above $120 per barrel if average Gulf production in 2027 remains about 4 million barrels per day below pre-war levels. That would compare with only a 0.5 million-barrel-per-day shortfall assumed in Goldman’s base case.
The most likely catalyst for such an outcome would be intensified attacks on shipping in the Strait of Hormuz and the Red Sea. Both routes remain critical to global energy supply, meaning even temporary disruptions can quickly increase freight, insurance and crude risk premiums.
A downside scenario could send Brent into the $60s
Goldman also outlined a considerably weaker scenario. If average Gulf production rises around 1 million barrels per day above pre-war levels in 2027, Brent could fall into the $60s.
That outcome would require a much stronger recovery in regional supply and shipping conditions than the bank currently assumes. It would also imply that the geopolitical premium embedded in crude prices fades materially as markets regain confidence in the reliability of Middle Eastern energy exports.
Inventory levels provide an important counterweight
Low visible inventories are often associated with sharp oil-price spikes, but Goldman cautioned against interpreting them in isolation. The bank noted that when visible global oil stocks reached an all-time low in November 2024, Brent was trading around $76 per barrel.
That comparison highlights the importance of broader market conditions. Inventory levels matter, but demand, spare production capacity, transport infrastructure and geopolitical expectations can all influence how strongly crude reacts to supply disruptions.
Goldman continues to favor geopolitical hedges
The bank continues to recommend hedging geopolitical risk through deferred European diesel timespreads covering March 2027 to December 2027. Goldman argues that these positions could rise significantly if persistent refinery outages in Russia or the Middle East keep nearby diesel spreads elevated.
The recommendation reflects the bank’s view that refined-product markets may remain particularly exposed to prolonged infrastructure disruptions, even if outright crude prices do not move into the most extreme upside scenario.
What investors should watch next
The central question for oil markets is whether shipping disruptions in the Strait of Hormuz and the Red Sea remain temporary or become a structural feature of the market into 2027. Persistent attacks or constraints on tanker traffic would increase the likelihood that crude prices remain above Goldman’s base-case forecasts.
Investors should also monitor Gulf production levels, Chinese import demand, OECD commercial inventories and the pace at which alternative pipeline capacity becomes available. These factors will determine whether geopolitical risk translates into an actual physical shortage or remains primarily a price premium.
For now, Goldman’s revised forecasts suggest that the bank expects the Middle East conflict to continue supporting oil prices, but not necessarily to create a sustained global supply crisis under its base-case scenario.
