Goldman Sachs has raised its oil price forecast as the ongoing deadlock in the Middle East conflict continues to disrupt production. The investment bank now estimates that Brent crude will trade at approximately $90 per barrel in the fourth quarter of this year, up from its earlier projection of $80. Similarly, US crude is forecast to average $83 per barrel in the October-December period, compared to a previous estimate of $75.
Reasons for the Upgrade
Goldman Sachs attributes the revised forecast to lower Persian Gulf production. In a note to clients, the bank stated: “We now assume a normalisation in Gulf exports by end-June (v mid-May prior) and a slower Gulf production recovery. The economic risks are larger than our crude base case alone suggests because of the net upside risks to oil prices, unusually high refined product prices, products shortages risks, and the unprecedented scale of the shock.”
Goldman’s analysts estimate that 14.5 million barrels per day of Persian Gulf crude production has been lost, leading to a record drawdown of global oil inventories of 11 to 12 million barrels per day this month.
Impact on Demand
The jump in oil prices is expected to lead to softer demand. Goldman explains: “We assume that global oil demand falls on a year-over-year basis by 1.7 million barrels per day in Q2 2026 and 0.1 million barrels per day in 2026 given the jump in refined product prices. Because extreme inventory draws are not sustainable, even sharper demand losses could be required if the supply shock persists longer.”
Three Scenarios
Goldman warns that the risks to its forecasts are to the upside and outlines three potential scenarios:
- Adverse scenario: Brent would average just over $100 in Q4 2026, assuming Gulf exports only normalise by end-July.
- Severely adverse scenario: Brent would average nearly $120 in Q4 2026, assuming Gulf exports normalise by end-July and a persistent reduction of 2.5 million barrels per day to Gulf capacity. This scarring is equivalent to Hormuz flows not recovering above 70% until pipeline capacity is expanded.
- Benign scenario: Brent would average just under $80 in Q4 2026, assuming Gulf exports normalise by mid-June, no capacity reduction, and stronger US and core OPEC supply responses.
Earlier this month, Goldman had trimmed its oil price forecast following the announcement of a US-Iran ceasefire.
