Goldman Sachs raised its medium-term oil price outlook after reassessing the pace at which crude exports from the Persian Gulf will recover following the disruption of flows through the Strait of Hormuz. The bank now expects higher average prices for both Brent and WTI into late 2026 and beyond, reflecting a slower production rebound and deeper inventory draws.
In its updated outlook, Goldman projects Brent crude will average $90 a barrel in the fourth quarter of 2026, up from a prior forecast of $80. Its U.S. benchmark forecast for WTI for the same quarter was raised to $83, from a previous $75. The bank also raised its 2027 expectations to $85 for Brent and $80 for WTI.
Market pricing at the time of the note showed futures trading at $107.60 for Brent and $96.24 for WTI by 06:36 GMT on Monday.
Reasoning behind the upgrades
Goldman said the revisions stem from a changed assumption that exports from the Gulf will not normalize until end-June, delayed from a prior mid-May estimate, together with a slower recovery in production capacity. The strategists, led by Daan Struyven, quantified the current impact on flows and inventories.
"We estimate that 14.5mb/d of Persian Gulf crude production losses are driving global oil inventories to draw at a record 11-12mb/d pace in April," strategists led by Daan Struyven said in a note.
The team added that the market balance shifted sharply: what was a 1.8 million barrel per day surplus in 2025 has swung to a record 9.6 million barrel per day deficit in the second quarter of 2026. They noted OECD commercial stocks are drawing at a rate of 2.2 million barrels per day.
Demand and supply dynamics
Goldman expects global demand to fall 1.7 million barrels per day year-on-year in the second quarter, a decline driven by a surge in refined product prices and instances of rationing. The bank identified the steepest demand downgrades in the Middle East, South Korea, Japan, and in price-sensitive markets across Africa.
On the supply side, growth outside the Gulf is projected to be modest. Goldman forecasts a combined increase of 1 million barrels per day from Russia, the United States, and Kazakhstan. The strategists highlighted factors that have constrained the U.S. supply response, including shale capital discipline, low drilled-but-uncompleted well inventories, and market expectations that the Strait of Hormuz disruption would be brief.
Scenario analysis and risks
Goldman views upside risks to its base case. In an adverse scenario where Gulf exports only normalize by end-July, the bank estimates Brent would average just over $100 a barrel in the fourth quarter. In a more severe scenario - combining end-July normalization with 2.5 million barrels per day of permanent capacity scarring - Brent could approach nearly $120.
Only a benign scenario, defined by mid-June normalization and no lasting capacity damage, would see prices slip to just below $80.
Even under the benign path, strategists warned that global visible oil inventories are likely to fall to their lowest levels since at least 2018, increasing the risk of non-linear price spikes if stocks reach what they termed "critically low levels." The note also identified potential U.S. oil export restrictions as an additional tail risk, though not part of Goldman’s base case.
Implications
The revision in Goldman’s forecasts underscores the sensitivity of oil markets to disruptions in Gulf exports and the limited near-term margin for error provided by non-Gulf supply growth. With inventories drawing sharply and scenario risks skewed toward higher prices, the bank's update points to a market environment where sustained supply constraints could push prices materially higher unless production normalizes sooner than currently assumed.