Goldman Sachs has upped its December 2026 crude oil price forecast by 6 per cent to $90 per barrel (bbl) from $85 a barrel earlier given the supply-side risks in the backdrop of West Asia war. The forecast, however, is nearly 13 per cent lower than the current price of around $103/bbl.
“We maintain our base case that continued adaptation of West Asia supply will eventually reduce crude oil prices, while potential renewed escalation still poses significant net upside risk. We nudge up our Brent December 2026 price forecast to $90/bbl because ongoing downside risks to supply likely slow the moderation in the time spreads risk premium—which we estimate at just over $20 today,” wrote analysts at Goldman Sachs in an 11 October report.
Price forecasts, their analysts argue, remain high because downside risks to supply, low stocks, and the high sensitivity of interest rates to oil prices are driving strong oil demand for physical restocking and financial hedging.
"Our 2027 average Brent forecast of $80/bbl is unchanged and balances downward price pressure from faster-than-expected adaptation in Gulf supply against a slower moderation in the risk premium," Goldman Sachs said.
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WTI crude prices, which are unusually low versus Brent because of high US-Europe shipping costs, Goldman Sachs' analysts said, are likely to average $81 in December 2026 and $73 in 2027.
From a level of around $70/bbl before the West Asia war started in February-end, crude oil prices had jumped to over $125/bbl as the Strait of Hormuz, a transit point for nearly 20 per cent of world's oil shipments remained closed for business. Gradual reopening triggered a slide back to pre-war days before oil climbed back to test the $100/bbl mark.
“Brent might average around $125/bbl in 2027 if 2027 average Gulf output remains 5mb/d below February 2026 levels, versus 0.3mb/d below in our base-case. Damage to oil infrastructure, intensified shipping attacks, and a more persistent risk premium are the most likely potential triggers of price upside,” Goldman Sachs' analysts said.
On the other hand, oil (Brent) might decline into the $60s in 2027, Goldman said, if 2027 average Gulf output rises 1mb/d above February 2026 levels.
"A faster recovery in West Asia output and/or a faster erosion of the risk premium are the most likely potential triggers of price downside," the analysts said.
Crude oil production
Those at S&P Global Energy, too, expect crude oil prices broadly in an $80-$100/barrel range through 2027, with Dated Brent averaging around $90 or higher for the balance of 2026 and $86 in 2027, $5 higher than the previous outlook.
“Prices would likely be higher if not for the current lack of available refining capacity, which continues to put downward pressure on crude prices. The Russia-Ukraine war and the US-Iran conflict have reduced refinery output because of damaged facilities or through difficulty moving products to market,” S&P Global Energy said in an 11 September note.
It expects fourth quarter 2026 global crude oil demand to be 80.2 million b/d, 4.7 million b/d less than a year ago.
“Crude markets remain caught between constrained supply and limited available refining capacity,” said Jim Burkhard, Vice President and Global Head of Crude Oil Research, S&P Global Energy.
West Asian crude oil production, meanwhile, is unlikely to return to pre-war levels by 2027-end as per S&P Global Energy’s estimates.
West Asian crude oil and condensate exports, it said, are expected to average around 10 million-16 million b/d on a monthly basis through 2027, compared with about 20 million b/d before the war in February 2026.
This forecast, however, does not assume a definitive end to the US-Iran conflict, a normalization of Hormuz or a disappearance of Red Sea disruption risk from Iran’s Houthi allies during that timeframe.