Goldman Sachs, in its latest analysis, has raised its forecast for the average price of Brent oil in 2027 to $88 per barrel. This change from the bank's previous lower estimate indicates significant shifts in the oil market outlook. Additionally, the forecast for West Texas Intermediate oil has also reached $78.
Increase in Oil Price Forecasts Until 2026
Goldman Sachs analysts, led by Dan Struyven, have raised the Brent price forecast for December 2026 from $90 to $105, and for West Texas Intermediate oil for the same date from $81 to $94. These changes reflect geopolitical concerns and shifts in supply and demand in the global oil market.
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According to the analysts at the bank, a significant portion of the oil price increase in October has been due to concerns about future disruptions in oil supply. Goldman Sachs estimates that about $27 of the price per barrel of oil is attributed to geopolitical risks that the market has added to oil prices due to the potential for supply disruptions.
Political Impacts on the Oil Market
Goldman Sachs believes that markets have increasingly focused on the likelihood of heightened tensions following the U.S. midterm elections on November 3. The bank references PolyMarket's predictive data, which indicates that the likelihood of an end to the ceasefire between the U.S. and Iran and an escalation of conflicts is rising. This probability has increased from about 10% before the elections to 50% by November 15 and around 75% by the end of the year.
Reports indicate that Gulf countries are on standby for potential short-term military operations by the U.S. Meanwhile, efforts to revive negotiations have also been mentioned, and these two conflicting paths have increased uncertainty in the oil market.
Goldman Sachs has also considered supply disruptions in its forecasts for 2027, factoring in a potential global supply disruption of one million barrels per day as an additional assumption. This issue relates to Middle Eastern tensions, the Russia-Ukraine war, and global geopolitical changes.
The bank has also outlined scenarios for various conditions. If Gulf oil production in 2027 remains about 3.5 million barrels per day lower than the 2025 average, Brent oil prices could rise to $140 per barrel. Conversely, if production recovers faster than expected, prices could drop to $60.
Ultimately, changes in oil prices will impact not only the energy market but also transportation costs, production, and household consumption. By late October, the average gasoline price in the U.S. reached $4.25 per gallon, reflecting a 50% increase since the beginning of the year. This rise in costs puts additional pressure on transportation companies, farmers, and other sectors, making it more challenging to reduce inflation.
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