Goldman Sachs says risks to its oil price forecasts remain tilted to the upside, even though global inventories have barely drawn since the war began. The bank puts Brent's 2027 range anywhere from the $60s to above $120 a barrel, depending on how far Gulf production strays from pre-war levels.
Goldman Sachs said risks to its oil price forecasts remain "significantly tilted to the upside on net, especially near-term", even as global crude oil inventories have barely drawn since the war began. The strategists pointed to a smaller-than-expected supply deficit, with declines concentrated in strategic reserves, oil stored on water and China.
Inventories stay high despite the war
Goldman estimated global landed oil inventories have declined to 8.6 billion barrels from 9.1 billion barrels before the war, though the total remains above estimates for minimum operational storage. The strategists said low visible global inventories and low OECD strategic reserve levels do not necessarily point to an imminent price increase. They noted that when visible global inventories hit an all-time low in November 2024, Brent traded at $76 per barrel.
The bank also expects price-sensitive Chinese crude imports, running about 30% lower year over year, to cap potential price gains. Goldman assumes Middle East oil supplies will keep adapting, with production gradually recovering in the second half of 2027 as pipelines become operational.
Brent's 2027 range hinges on Gulf output
Under Goldman's upside scenario, Brent could exceed $120 per barrel if average Gulf oil production in 2027 stays 4 million barrels per day below pre-war levels; its base case assumes production averages 0.5 million barrels per day below pre-war levels. The strategists identified intensified shipping attacks in the Strait of Hormuz and Red Sea as the most likely trigger for that upside case.
A downside scenario has Brent falling into the $60s during 2027 if average Gulf production rises to 1 million barrels per day above pre-war levels. Goldman said it continues to recommend hedging geopolitical risk through deferred March-2027-to-December-2027 European diesel timespreads, which would increase by more than 100% if persistent Russian or Middle Eastern refinery outages keep the nearby spread around current levels.
Source: InvestorsHub
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