Summary
- Goldman Sachs raised its December Brent forecast to $105 a barrel from $90 and lifted its 2027 average to $88, citing high disruption risk from the Middle East and Russia-Ukraine conflicts and adding a 1 million bpd supply buffer to its base case.
Goldman’s upgrade reinforces the case that oil’s geopolitical premium is likely to persist even if diplomacy produces short-term relief. The bank’s view that a lasting breakthrough will be difficult runs counter to Monday’s talks-driven dip in crude, suggesting some on Wall Street see that move as fragile. Adding a standing disruption allowance to its base case also signals that sell-side forecasters are now treating supply shocks as a feature of the market, not a temporary aberration. Higher oil forecasts also carry wider implications: they add to inflation risks that have already pushed the Fed toward hikes, and that pressure has weighed on gold throughout the war. For energy equities and producer currencies, the revision supports a firmer price floor into 2027.
Goldman has stopped betting on a smooth return of Gulf supply and started budgeting for the next disruption, lifting its oil forecasts on the view that the world’s conflicts are not ending soon.
- Goldman Sachs raised its December Brent forecast to $105 a barrel from $90, and set its December WTI forecast at $94
- It lifted its 2027 average forecasts to $88 for Brent from $80, and to $78 for WTI from $73
- The bank cited high disruption risk from the Middle East and Russia-Ukraine conflicts, along with broader geopolitical fragmentation
- Its base case now includes a 1 million barrel per day global supply disruption allowance for 2027, because the timing and location of disruptions are hard to predict
- Goldman said markets are pricing a higher risk premium, with many traders expecting a lasting diplomatic breakthrough to be difficult
Goldman Sachs has raised its oil price forecasts for the end of this year and for 2027, arguing that conflicts in the Middle East and between Russia and Ukraine will keep the risk of supply disruptions high, according to reports by CNBC and Bloomberg (both gated)
The bank now expects Brent crude to reach $105 a barrel in December, up from its previous forecast of $90, with West Texas Intermediate at $94. It also lifted its 2027 average forecasts to $88 a barrel for Brent and $78 for WTI, from $80 and $73 respectively. The note was led by strategist Daan Struyven.
Central to the revision is a change in how Goldman treats risk. Because the timing and location of disruptions are nearly impossible to predict, the bank said its base case now includes a global supply disruption allowance of 1 million barrels per day in 2027. Goldman said the Middle East and Russia-Ukraine conflicts, together with broader geopolitical fragmentation, create a high risk of disruption, and that markets are pricing a higher risk premium because many traders believe a lasting diplomatic breakthrough will be hard to achieve.
The upgrade marks a shift in tone from the bank’s view just a few weeks ago. In mid-October, Goldman argued that continued adaptation of Middle East supply would eventually bring crude prices down, while warning that renewed escalation posed significant upside risk. At that point it forecast December Brent at $90 and a 2027 average of $80, and estimated that spot prices contained a risk premium of nearly $25 a barrel. It also noted at the time that global oil demand had fallen by 3.3 million barrels per day year on year in the third quarter.
The timing of the latest note reflects a busy period for supply risk. Over the weekend, Ukraine resumed drone attacks on Russian oil refineries, and multiple vessels were reported struck or damaged across the Gulf, the Strait of Hormuz and the Gulf of Oman. At the same time, Iran has been discussing a Qatar-brokered plan that it says could reopen Hormuz within two days if Washington meets its conditions. That prospect weighed on crude in early Asian trade on Monday.
Goldman joins other banks that have raised oil forecasts after months of war in the Middle East. Its decision to build disruption into its base case, rather than treat it purely as an upside risk, suggests the bank sees supply shocks as an ongoing feature of the market, regardless of how individual negotiations play out.
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