GOLDMAN SACHS Group, Inc. raised oil-price forecasts for the year-end and 2027 on elevated risks to supplies, joining other banks in hiking their outlooks after months of war in the Middle East.
Brent is now seen at $105 a barrel in December, up from a previous estimate of $90, and will average $88 next year, 10% more than seen before, analysts including Daan Struyven and Yulia Zhestkova Grigsby said in a note, which also increased forecasts for US oil marker West Texas Intermediate.
“Substantial downside supply risks are likely to sustain a large, near-term risk premium,” the analysts wrote. The markets are assigning “increasing weight to escalation after the Nov. 3 US midterms and subsequent potential weakness in Mideast supply,” they added in the Nov. 1 report.
Global benchmark Brent rallied 14% in October, hitting a six-month high, even as crude supplies from the Middle East rebounded close to pre-war levels. The gains came on concern that hostilities between the US and Iran may flare up again after the midterm elections, with President Donald Trump repeatedly hinting that he may resume airstrikes. For his part, Iran’s supreme leader has ordered his top commanders to prepare for renewed confrontation.
Intensified shipping attacks and damage to infrastructure were among factors that could trigger further price gains, the analysts said, while also highlighting risks from Russia’s invasion of Ukraine.
“With the timing and location of disruptions nearly impossible to predict, our base case now includes a 1-million-barrel-per-day global supply disruption allowance in 2027.”
Beyond its core view, Goldman also sketched bullish and bearish frameworks for 2027 with prices spanning a range of about $70, highlighting the challenges facing forecasters as they grapple with a wide range of potential outcomes.
In the bank’s upside scenario, Brent may average $130 next year if Persian Gulf output remains 3.5 million barrels a day below last year’s average, the analysts said. But in the downside version, marked by a faster recovery in regional output, futures “might decline into the $60s,” they said.
In recent weeks, Morgan Stanley raised its forecast for Dated Brent — a key physical price — to $105 a barrel for the fourth quarter, while ANZ Group Holdings Ltd. hiked its year-end outlook for Brent futures to the same figure. Most-active contracts fell below $110 in Monday’s trade. — Bloomberg