Goldman Raises Oil Forecast
Goldman Sachs raises oil price forecasts, warning that Middle East disruptions could push Brent above $120.
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Key Points
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Markets are pricing in a more prolonged disruption: Brent had risen to about $97 a barrel, while the options-implied probability of Brent exceeding $100 in March 2027 increased to roughly 25%, from about 6% a month earlier.
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Goldman said OECD commercial inventories have “barely drawn since the war began,” with much of the stock reduction concentrated in strategic reserves, oil held on water and inventories in China rather than in regular commercial supplies.
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Global landed oil inventories have fallen from about 9.1 billion barrels before the war to 8.6 billion barrels, but Goldman estimates that this remains well above minimum operational storage requirements; it also noted that Brent traded at $76 even when visible global stocks reached a record low in November 2024.
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China’s price-sensitive crude imports remain about 30% below year-earlier levels, a weakness Goldman expects to limit the upside in oil prices.
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Goldman’s forecast reversal followed an earlier reduction after a memorandum of understanding between the United States and Iran; commodities research head Daan Struyven changed course as hostilities in the Strait of Hormuz showed no sign of easing.
Goldman Sachs raised its oil forecasts as Middle East shipping disruptions show no sign of ending. The bank lifted its December 2026 Brent forecast by $5 to $85 a barrel and raised 2027 average forecasts to $80, according to Market Screener. However, Goldman warns that prolonged attacks could push Brent above $120 a barrel if regional production remains far below pre-conflict levels.
Brent crude has already climbed to around $97 a barrel as traders price in extended disruptions. Yahoo Finance reports the options-implied probability of Brent exceeding $100 in March 2027 jumped to roughly 25%, up from about 6% a month earlier. Goldman's commodities chief reversed course after a failed U.S.-Iran deal, citing ongoing Strait of Hormuz hostilities.
Why Goldman Sees Limited Upside From Inventory Drawdowns
Goldman says oil inventories have barely moved since the conflict began. Market Screener notes that OECD commercial stocks dropped only modestly. Most of the reduction came from strategic reserves, oil floating on ships, and Chinese stockpiles — not regular commercial supplies. Global inventories fell from 9.1 billion barrels to 8.6 billion barrels, but remain well above minimum operational requirements.
Even record-low inventory levels didn't push Brent to extreme prices. Goldman points out that Brent traded at $76 when visible global stocks hit a record low in November 2024. This suggests that inventory cushions still exist. Chinese crude imports remain about 30% below year-earlier levels, limiting demand and capping price gains.
Market Pricing Shifts as Disruption Looks Long-Term
Oil traders are betting disruptions will last well into 2027. Yahoo Finance reports Brent crude jumped 2.25% to cross $100 for the first time in nearly two months. The surge reflects fears of regional war and persistent attacks on Middle East energy infrastructure. Options markets now assign a 25% probability to Brent staying above $100 by March 2027.
This marks a sharp shift in market expectations. Head Topics noted that Brent reached $100 for the first time since July, driven by escalating U.S.-Iran hostilities. Market participants are no longer treating the Strait of Hormuz tensions as temporary. Instead, traders assume supply shortfalls will persist for months, pushing average prices higher through 2027.
The $120 Risk if Production Stays Depressed
Goldman's forecast remains measured because supply is expected to recover gradually. WTI was raised by $5 to $80 for December 2026. But upside risks dominate. If Gulf production stays far below pre-conflict levels or attacks intensify, Brent could breach $120 — nearly 24% above current prices. This scenario depends on prolonged regional conflict and no rapid supply adaptation.
Goldman's shift reflects higher conviction about disruption duration. Market Screener reports commodities head Daan Struyven reversed an earlier forecast cut that followed a U.S.-Iran memorandum of understanding. The lack of easing in Strait hostilities convinced Goldman that risks remain sharply skewed upside. Any major attack on regional oil infrastructure could trigger the $120-plus scenario quickly.
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