Goldman Sachs has raised its oil price forecasts for 2026 and 2027, warning that growing geopolitical tensions and potential supply disruptions in the Middle East could keep crude prices elevated.
The investment bank believes that significant risks to regional oil production will continue supporting a substantial geopolitical risk premium, even as Middle Eastern output gradually recovers.
Analysts led by Daan Struyven increased their December 2026 Brent crude forecast to $105 per barrel from $90. The bank also raised its West Texas Intermediate (WTI) projection to $94 from $81.
Despite expectations for improving supply conditions, Goldman Sachs warned that uncertainty surrounding Iran and broader geopolitical conflicts could create further volatility in global energy markets.
Goldman Sachs Raises Brent and WTI Oil Price Forecasts
Goldman Sachs revised its oil price expectations higher across several important forecasting periods.
For December 2026, the bank now expects Brent crude to reach $105 per barrel, representing a $15 increase from its previous estimate.
Its WTI crude forecast was also lifted by $13 to $94 per barrel.
The bank made additional upward revisions to its 2027 average price projections.
Goldman now expects Brent to average $88 per barrel in 2027, compared with its previous estimate of $80.
Meanwhile, its average WTI forecast increased to $78 per barrel from $73.
The revisions reflect concerns that geopolitical instability could continue threatening oil production and exports, even if current recovery efforts proceed as anticipated.
Geopolitical Risk Premium Drives Oil Prices Higher
According to Goldman Sachs, a sharp increase in the geopolitical risk premium has been responsible for much of the recent rally in crude oil prices.
The bank estimates that the premium reached approximately $27 per barrel during October, helping push spot Brent futures as high as $118.
However, Goldman believes the underlying fair value of Brent crude remained relatively stable during September and October, at levels in the $90s.
This assessment reflects broadly unchanged global oil inventories, as adjustments in production and consumption helped keep the market balanced.
Consequently, analysts attribute much of the recent price surge to growing fears of future supply interruptions rather than an immediate deterioration in global oil fundamentals.
The estimated $27 risk premium is consistent with markets pricing in a potential reduction of approximately 5 million barrels per day in Middle Eastern oil production lasting six months.
US-Iran Tensions Raise Concerns Over Oil Supply Disruptions
Geopolitical uncertainty surrounding Iran remains a central factor influencing Goldman’s oil market outlook.
The bank noted that investors are increasingly concerned about the possibility of renewed military escalation following the November 3 US midterm elections.
According to probabilities derived from the Polymarket prediction market, the perceived likelihood of the US-Iran ceasefire ending through renewed escalation rises significantly over the coming weeks.
The implied probability stands at approximately 10% before the elections, increasing to around 50% by November 15 and roughly 75% by the end of 2026.
These figures represent prediction market expectations rather than confirmed forecasts of future geopolitical events.
Goldman identified three potential military developments attracting particular attention from oil traders.
The first involves possible US or Israeli strikes against underground Iranian nuclear facilities.
The second concerns attacks targeting missile installations near the strategically important Strait of Hormuz.
The third, and potentially most disruptive scenario, involves broader strikes against Iran’s energy infrastructure.
According to the bank’s analysts, the risk of retaliatory attacks against oil facilities across the Persian Gulf would likely be greatest under the third scenario.
Such developments could threaten regional production and exports, increasing pressure on international crude oil prices.
Oil Markets Price in Persistent Supply Risks Through 2028
Concerns about geopolitical disruptions are also influencing longer-dated oil futures contracts.
Goldman Sachs highlighted rising prices for December 2027 and December 2028 Brent futures as evidence that investors are increasingly considering the possibility of prolonged weakness in Middle Eastern oil exports.
The bank has consequently incorporated an additional global supply disruption allowance of 1 million barrels per day into its 2027 forecasts.
This adjustment reflects potential risks associated with ongoing tensions in the Middle East, the Russia-Ukraine conflict, and increasing geopolitical fragmentation.
However, Goldman acknowledged that predicting the exact location and timing of future supply disruptions remains extremely difficult.
The uncertainty complicates oil market forecasts because even relatively small changes in global production can have significant effects on prices.
Brent Oil Could Reach $140 Under Severe Supply Disruption Scenario
Although Goldman Sachs has raised its central oil price projections, the bank also outlined several alternative scenarios depending on future supply developments.
Its baseline outlook continues to anticipate that crude oil prices will eventually decline below levels implied by current futures contracts.
This scenario assumes that the geopolitical risk premium gradually decreases while oil production across the Persian Gulf continues recovering.
Nevertheless, Goldman warned that upside price risks remain important.
Under a more severe disruption scenario, Brent crude could reach $140 per barrel.
In that situation, the bank estimates that Brent could average approximately $130 throughout 2027.
Such an outcome would require Persian Gulf production to remain around 3.5 million barrels per day below its average 2025 level.
The projection illustrates how sustained production losses could significantly tighten global oil supplies and maintain upward pressure on energy prices.
However, the $140 estimate represents a conditional risk scenario rather than Goldman’s central forecast.
Brent Prices Could Fall Into the $60s if Oil Supply Recovers
Goldman Sachs also outlined a considerably more bearish scenario for crude oil prices.
If Persian Gulf production increases by approximately 2.5 million barrels per day above its 2025 average and anticipated supply disruptions fail to materialize, Brent crude could decline into the $60s.
Under these conditions, stronger production and reduced geopolitical uncertainty would likely weaken the risk premium currently supporting crude prices.
The possibility of such a decline highlights the importance of actual oil supply developments rather than geopolitical expectations alone.
Goldman believes risks have become more balanced between higher and lower price outcomes, although the overall outlook still leans toward the upside.
Global Oil Market Outlook Remains Highly Uncertain
Goldman Sachs’ revised oil price forecasts highlight the growing influence of geopolitical developments on global energy markets.
Although regional production is recovering as expected, fears of renewed conflict and potential disruptions to critical oil infrastructure continue supporting elevated crude prices.
The investment bank’s central projections place Brent at $105 in December 2026 and an average of $88 in 2027.
However, alternative scenarios suggest that prices could move substantially higher or lower depending on developments in the Middle East and global production levels.
Investors will be closely monitoring US-Iran relations, Persian Gulf oil exports, the Strait of Hormuz, and the Russia-Ukraine conflict for signs of changing supply risks.
For now, the combination of geopolitical uncertainty and potential production disruptions suggests that volatility could remain a defining feature of the global oil market.
