Goldman Sachs lifts December oil forecasts on supply risks

Goldman Sachs has raised its December oil price forecasts sharply, warning that persistent threats to Gulf supplies could push Brent crude as high as $140 a barrel in 2027.
The investment bank increased its December 2026 Brent forecast to $105 a barrel from $90 and its forecast for US West Texas Intermediate (WTI) to $94 from $81, according to its assessment issued on Sunday. The changes reflect heightened geopolitical risks despite an improvement in physical oil flows from the Middle East.
Goldman also lifted its average price projections for 2027. It now expects Brent to average $88 a barrel, compared with $80 previously, while its WTI forecast increased to $78 from $73. Those central estimates remain substantially below the bank’s more severe disruption scenario.
Under that scenario, Brent could reach $140 a barrel and average approximately $130 during 2027 if Gulf oil production remains 3.5 million barrels per day below its 2025 average. The projection is conditional on sustained output losses rather than a prediction that prices will necessarily reach that level.
The bank’s revised baseline incorporates an allowance for global supply disruptions of one million barrels per day in 2027, acknowledging that interruptions could persist even as producers and shipping companies adapt to the regional conflict.
Analysts led by Daan Struyven, Goldman’s co-head of global commodities research and head of oil research, identified attacks on shipping, damage to energy infrastructure and a prolonged geopolitical risk premium as potential drivers of higher prices. They also pointed to uncertainty surrounding the conflicts in the Middle East and between Russia and Ukraine.
The bank expects traders to continue demanding additional compensation for the possibility of interrupted supplies. That premium reflects concerns about the durability of diplomatic arrangements and the difficulty of anticipating when or where another disruption might occur.
Oil markets have already demonstrated the distinction between physical availability and perceived risk. Middle Eastern crude flows have recovered substantially, but buyers have continued paying elevated prices to secure deliveries and protect themselves against potential shortages.
Goldman’s analysis of October’s rally estimated that geopolitical risk accounted for roughly $27 a barrel of Brent’s price, while its assessment of fundamental fair value remained near $90. That difference helps explain why prices rose even as actual supply conditions improved.
The bank also noted that physical crude buyers were purchasing additional barrels as a precaution. Financial investors, meanwhile, have used oil positions to hedge against the wider effects of higher energy costs on bonds and equities.
Brent ended October at a six-month high as uncertainty over the US-Iran conflict supported prices. On Monday, however, the international benchmark fell more than one per cent to around $111.84 a barrel as Iranian and Qatari officials continued discussions aimed at ending the conflict involving the United States, Israel and Iran.
The decline illustrated how quickly expectations can change when diplomatic developments alter the perceived probability of disruption. Nevertheless, negotiations have not eliminated the operational risks facing tankers, ports, pipelines and production facilities across the region.
The bank’s outlook also recognises a downside scenario. If Gulf output recovers more strongly and supply interruptions fail to materialise, Brent could retreat into the low $60s during 2027. That possibility underscores the importance of production volumes and the speed at which the market’s risk premium diminishes.
Refined petroleum products present another constraint. Goldman said in an October assessment that Gulf exports of products including diesel and petrol remained at about 40 per cent of their 2025 average, reflecting refinery damage and limited investment in processing capacity.
Such constraints matter because recovering crude production does not automatically restore supplies of transport fuels. Refining capacity, shipping availability and the cost of insurance can influence the prices paid by consumers independently of movements in crude benchmarks.
The forecasts also retain a difference between Brent and WTI, the US benchmark. Elevated freight costs and regional delivery constraints can widen that gap, meaning international buyers may face different pricing conditions from refiners purchasing domestically produced American crude.
Goldman’s previous October outlook had anticipated Brent at $90 in December and an average of $80 in 2027, based on gradual adaptation of Middle Eastern supplies. Its latest revisions place greater weight on the possibility that further interruptions will complicate that recovery.