Goldman Raises Oil Price Forecast for December as War Risks Cloud 2027 Outlook

Goldman Sachs raised its oil price forecasts for December and 2027, warning that Middle East and Russia-Ukraine conflicts threaten global supplies and make it hard to predict a lasting easing of energy market tensions.

The investment bank now expects Brent crude, the international benchmark, to reach $105 a barrel in December, up from its previous forecast of $90. It also raised its December forecast for West Texas Intermediate, the U.S. benchmark, to $94 a barrel.

The revisions reflect growing concern that geopolitical instability will keep oil markets exposed to interruptions. For 2027, Goldman lifted its average Brent forecast to $88 a barrel from $80, a 10% increase. Its WTI forecast rose to $78 from $73, an increase of approximately 6.8%.

The central reason for the higher estimates is a change in how Goldman accounts for potential supply losses. Rather than assuming that oil production and deliveries will proceed without significant interruptions, the bank has incorporated a disruption allowance into its main forecast.

"The Mideast and Russia-Ukraine conflicts, alongside broader geopolitical fragmentation, create high disruption risk," Goldman said in a note led by strategist Daan Struyven. "With the timing and location of disruptions nearly impossible to predict, our base case now includes a 1mb/d global supply disruption allowance in 2027," the bank added.

That allowance represents 1 million barrels a day. It is an assumption built into Goldman's outlook, rather than a prediction that a particular producer will lose that amount of supply on a specific date.

That way, Goldman does not need to identify the next disruption precisely to conclude that the overall risk warrants higher price forecasts. Several unresolved conflicts can increase the possibility of supply losses, even when the nature of any individual interruption remains uncertain.

The revised outlook also reflects a higher geopolitical risk premium, according to the note. Traders are assigning greater weight to the possibility that diplomatic efforts will struggle to produce a durable breakthrough. In oil markets, a risk premium means prices can reflect the threat of future shortages before those shortages materialize.

Buyers and sellers factor potential disruptions into their decisions, alongside available supply and expected demand. Consequently, expectations about negotiations and military developments can influence prices even without an immediate change in production.

Goldman's December Brent revision is particularly large, with a $15 increase, or approximately 16.7%, from its previous estimate. That adjustment signals a more expensive near-term outlook than the bank had previously anticipated.

However, the forecasts still point to lower average prices next year than Goldman expects in December. Its $88 Brent estimate for 2027 sits $17 below its December projection, while the $78 WTI forecast is $16 lower.