Goldman Sachs has revised its oil price outlook higher as its strategists factor continued Middle East shipping disruptions into their expectations for 2027.
The bank increased its Brent and WTI projections by $5 per barrel. Strategists led by Daan Struyven now forecast Brent at $85 per barrel and WTI at $80 for December 2026, followed by respective prices of $80 and $75 during 2027.
Brent spot futures have reached $97, while oil options indicate a higher probability of prices exceeding $100 next year. Goldman said the options-implied probability of Brent trading above $100 in March 2027 has risen to around 25%, compared with approximately 6% a month earlier.
Goldman Points to Limited Drawdown in OECD Inventories
Despite incorporating longer-lasting Middle East shipping disruptions into its outlook, Goldman made what it described as a modest adjustment to its oil price estimates.
One factor is the movement in OECD commercial inventories, which the bank said have “barely drawn since the war began.” Goldman attributed this to a smaller-than-expected deficit and said inventory reductions have been concentrated in strategic reserves, oil held on water and China.
The bank’s projections also assume further adaptation of Middle Eastern supplies. Under its assumptions, production gradually recovers in the second half of 2027 as additional pipelines begin operating.
Goldman said current levels of visible global oil inventories and OECD strategic reserves should not necessarily be interpreted as indicating an imminent price increase. The bank noted that Brent traded at $76 per barrel when visible global inventories reached their lowest recorded level in November 2024.
Its estimates show global landed oil inventories declining from 9.1 billion barrels before the war to about 8.6 billion barrels currently. Goldman said that level remains above estimates for minimum operational storage.
Chinese crude demand is another factor in the outlook. Price-sensitive crude imports into China remain approximately 30% below their year-earlier level and are expected by Goldman to moderate potential price increases.
Brent Could Exceed $120 Under Goldman’s Upside Scenario
Goldman said the risks surrounding its projections are “significantly tilted to the upside on net, especially near-term.”
The bank’s upside scenario would see Brent rise above $120 per barrel if average Gulf production during 2027 remains 4 million barrels per day below pre-war output. That compares with a reduction of 0.5 million barrels per day incorporated into Goldman’s base-case assumptions.
According to the strategists, increased attacks on shipping through the Strait of Hormuz and Red Sea represent the most likely trigger for that scenario.
Goldman also outlined a downside case in which Brent falls into the $60s during 2027. That scenario assumes average Gulf production reaches 1 million barrels per day above its pre-war level.
The bank continues to recommend deferred March 2027 to December 2027 European diesel timespreads as a hedge against geopolitical risk. Goldman said those spreads could increase by more than 100% if continued refinery outages in Russia or the Middle East keep the nearby nine-month spread around current levels.
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