Goldman Sachs raised its crude price outlook on Sunday, increasing both Brent and WTI forecasts by $5 per barrel as the firm anticipates that shipping disruptions in the Middle East will extend into next year. The bank's energy strategy team, led by Daan Struyven, set new forecasts of $85 per barrel for Brent and $80 per barrel for WTI for December 2026, and $80 per barrel for Brent and $75 per barrel for WTI for 2027.
Markets are already reacting to the heightened risk premium. Brent spot futures have climbed to $97, while the options-implied probability of Brent topping $100 in March 2027 has jumped to about 25%, from roughly 6% a month ago.
Why the upgrade is measured
Goldman described the price increase as modest for two principal reasons. First, OECD commercial oil inventories have "barely drawn since the war began," the strategists wrote, suggesting the actual supply deficit has been smaller than many expected. The limited drawdown has been concentrated in strategic reserve withdrawals, oil held on-water, and inventories within China.
Second, the bank assumes continued adaptation by Middle East producers and infrastructure operators. Goldman expects supply to gradually recover, with production returning toward pre-conflict levels by the second half of 2027 as pipelines are brought back online.
The strategists cautioned that low visible global oil stocks and depressed OECD strategic reserve levels do not automatically equate to an immediate spike in prices. They noted that when visible global stocks reached an all-time low in November 2024, Brent was trading at $76. Goldman also estimated that global landed oil stocks have fallen from 9.1 billion barrels before the war to 8.6 billion barrels at present, a decline that leaves global inventories well above estimates of minimum operational storage.
Demand and moderation factors
Goldman flagged the state of Chinese crude buying as a moderating influence on near-term upside. Price-sensitive Chinese crude imports remain down about 30% year-over-year, and the bank expects that suppressed import activity to limit upward pressure on prices.
Upside and downside scenarios
The bank judged risks to its baseline forecast to be "significantly tilted to the upside on net, especially near-term." In an upside scenario, Brent could top $120 per barrel if average Gulf output in 2027 remains 4 million barrels per day below pre-war levels - a materially larger shortfall than the 0.5 million barrels per day shortfall assumed in Goldman's base case. The strategists identified intensified shipping attacks in the Strait of Hormuz and the Red Sea as the most likely triggers for such an outcome.
Conversely, Goldman set out a downside path in which Brent falls into the $60s in 2027 if average Gulf output rises 1 million barrels per day above pre-war levels.
Hedging recommendation
To manage the geopolitical risk, Goldman continues to recommend hedging via deferred March 2027 to December 2027 European diesel timespreads. The bank said those timespreads would rise by more than 100% if persistent Russian or Middle Eastern refinery outages keep the nearby nine-month spread near current levels, making such positions a potential protection against sustained refining disruptions.
Overall, Goldman adjusted its price baseline upward amid an environment of tight visible stocks, constrained strategic reserves and persistent shipping risks, while retaining both a clearly defined upside tail and a path for prices to ease if Gulf production recovers more quickly than expected.