Goldman Sachs Raises Oil Price Forecasts as Middle East Conflict Disrupts Global Supply
Wall Street’s most closely watched investment bank has sharply revised its oil price projections upward, citing the unprecedented scale of supply disruptions stemming from the ongoing conflict in the Middle East. Goldman Sachs now expects benchmark Brent crude to average $90 per barrel in the fourth quarter of 2026, a significant increase from its previous forecast of $80, according to a research note released on Sunday, April 26.
The bank too adjusted its outlook for West Texas Intermediate (WTI), the U.S. Crude benchmark, raising its fourth-quarter average to $83 per barrel from an earlier estimate of $75. The revisions reflect growing concerns that the war’s impact on energy markets could persist longer than initially anticipated, with potential ripple effects across the global economy.
“The magnitude of the impact is without precedent,” Goldman Sachs analysts wrote in the note, warning of “greater economic risks” due to soaring oil prices, elevated refined product costs, and the threat of supply shortages. The bank’s base-case scenario assumes that oil exports from the Gulf region will normalize by the end of June—delayed from its prior expectation of mid-May. However, recovery in Gulf production is expected to accept even longer, prolonging market tightness.
Since the conflict escalated, crude prices have surged nearly 40%, with Brent hitting a three-week high on Monday, April 27. The rally underscores how geopolitical tensions in key oil-producing regions can swiftly reshape market dynamics, leaving traders and policymakers grappling with heightened volatility.
Goldman Sachs outlined a more severe “adverse scenario” in which Gulf exports fail to stabilize until late July. Under that projection, Brent could average just above $100 per barrel in the fourth quarter. The bank’s most extreme forecast—reserved for a prolonged disruption—suggests prices could climb as high as $120 per barrel by the end of the year, a level that would test consumer budgets and inflation targets worldwide.
The bank’s analysts also flagged the risk of demand destruction if the supply crisis persists. “Even greater demand losses may be necessary to balance the market if the supply shock continues,” the note cautioned, hinting at the potential for economic slowdowns as businesses and households face higher energy costs.
Investors have already begun pricing in the likelihood of sustained high prices, with futures markets reflecting expectations that elevated oil costs could linger well into 2027. The shift in sentiment comes as central banks and governments monitor inflationary pressures, which have proven stubborn in the face of previous supply shocks.
For now, Goldman Sachs’ revised forecasts serve as a stark reminder of how quickly geopolitical risks can upend energy markets. With the conflict showing no signs of abating, traders are bracing for further turbulence—and the possibility of even higher price ceilings in the months ahead.
The stakes are particularly high for industries reliant on stable energy costs, from airlines to manufacturing. Analysts warn that if prices breach the $100 mark, it could trigger a broader reassessment of growth forecasts, particularly in emerging markets where fuel subsidies are already under strain.
Even as Goldman’s base case remains the most likely outcome, the mere possibility of a $120 barrel has sent shockwaves through financial markets. For now, all eyes remain on the Gulf, where any further escalation could tip the scales toward the bank’s worst-case scenario.
