Goldman Sachs has raised its December Brent crude price forecast to $105 a barrel from an earlier $90, citing escalating risks from Middle East tensions and the war between Russia and Ukraine.
According to Goldman Sachs’ new Brent oil forecast, the investment bank also lifted its December price outlook for WTI crude to $94 a barrel. The bank’s average annual projections for 2027 climbed to $88 for Brent and $78 for WTI, up from previous estimates of $80 and $73 respectively. The analysis was authored by bank strategist Daan Struyven.
Goldman Sachs said the revision was not driven by any single event but reflects a change in its modelling approach. The bank’s base-case forecast now permanently includes a buffer equal to a 1 million barrel-per-day loss of global oil supply through 2027, since it is difficult to predict exactly where and when such disruptions might occur.
The bank noted that unresolved military tension in the Middle East, the continuing Russia-Ukraine war, and deepening fractures among geopolitical blocs point to an extended period of elevated risk. It added that with no durable diplomatic settlement expected between the parties in the near term, market participants are building a bigger risk buffer into prices.
The shift marks a sharp reversal from the position Goldman Sachs held in mid-October. At that time, analysts had expected oil supply from Gulf countries to gradually stabilize, pulling prices lower, and viewed the risk of fresh conflict as a secondary concern. Back then, the bank’s December Brent forecast stood at $90 and its 2027 average at $80, with roughly $25 of the spot price attributed to a risk premium. The bank had also flagged that global oil consumption in the third quarter fell by 3.3 million barrels per day year-on-year.
Forecast follows new supply threats
The updated forecast follows a weekend of fresh supply threats. Ukraine launched new drone strikes on Russian oil refineries, while several vessels came under attack or were damaged in Gulf waters, including the Strait of Hormuz and the Gulf of Oman.
Upward revisions to oil price forecasts can feed through to inflation expectations and central banks’ interest rate decisions. Such shifts typically weigh on gold prices while creating a favorable environment for energy company shares and the currencies of oil-exporting nations.
Source: Praevis
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