Goldman Sachs raised its oil price forecasts, saying substantial downside risks to Middle East supply will sustain a large near-term risk premium. Its December 2026 West Texas Intermediate forecast now stands at $94 a barrel, up from $81.
Goldman Sachs raised its crude oil price forecasts, saying substantial downside risks to Middle East supply will sustain a large near-term risk premium even as regional output recovers as expected.
Strategists led by Daan Struyven lifted their December 2026 WTI forecast to $94 from $81. Their Brent forecast for the same month rose to $105 a barrel from $90. The 2027 average forecasts increased to $78 for WTI from $73, and to $88 for Brent from $80.
Risk premium drives October's rally
A jump in the risk premium to around $27 a barrel, the strategists said, "now explains most of October’s crude price rally". Spot Brent futures reached $118.
Goldman estimates Brent's fair value was little changed in September and October, in the $90s, because global inventories, its main driver, were roughly flat.
Midterms and Iran raise escalation odds
The strategists said the market is now assigning more weight to escalation after the Nov. 3 U.S. midterms. The Polymarket-implied probability that the U.S.-Iran ceasefire ends due to escalation rises from 10% before the midterms to about 50% by Nov. 15 and about 75% by year-end.
Market participants are focused on three possible U.S. or Israeli actions against Iran: strikes on underground nuclear facilities, strikes on missile sites near the Strait of Hormuz, and broader strikes on Iran's energy infrastructure. The strategists noted that the risk of Iran and its allies hitting Gulf oil infrastructure is likely highest in the third scenario.
Scenarios range from the $60s to $140 for Brent
The $27 premium is consistent with the market pricing a 5 million barrel-a-day drop in Middle East output lasting six months, according to Goldman Sachs. Goldman also added a 1 million barrel-a-day global supply disruption allowance for 2027.
Its base case still sees prices falling below the forwards, assuming the risk premium moderates and Persian Gulf output keeps recovering. The strategists said risks are now more balanced but still tilt to the upside. Brent could reach $140 and average about $130 in 2027 if Gulf output stays 3.5 million barrels a day below its 2025 average, while it could fall into the $60s if output rises 2.5 million barrels a day above 2025 levels and the assumed disruption doesn't occur.
Source: Investing.com
Trading involves risk.
Risk Disclaimer
