Goldman Sachs Boosts Oil Price Forecast Amid Supply Disruptions and War Risks

Goldman Sachs has sharply increased its oil price forecasts for the fourth quarter of 2026, citing prolonged supply disruptions in the Middle East and an unprecedented drawdown in global oil inventories. The investment bank now expects Brent crude to average $90 per barrel and U.S. West Texas Intermediate (WTI) to reach $83 per barrel in the final three months of the year, according to an April 26 research note led by Daan Struyven, co-head of Global Commodities Research and head of Oil Research at Goldman Sachs.

Supply Shock Drives Forecast Revision

The updated projections reflect a significant shift in the bank’s outlook, driven by lower-than-expected output from the Middle East and delays in the reopening of the Strait of Hormuz, a critical chokepoint for global oil shipments. Goldman Sachs had previously anticipated the strait would resume normal operations by mid-May, but the timeline has now been extended to the end of June, exacerbating supply constraints.

The bank estimates that crude supply losses in the region have reached approximately 14.5 million barrels per day (mmbbl/d), contributing to an “extreme” global inventory draw of 11–12 mmbbl/d in April. This marks one of the most severe supply shocks in recent history, with Goldman Sachs describing the current market disruption as unprecedented in scale.

Market Balance Shifts from Surplus to Deficit

The revised forecast also highlights a dramatic reversal in the global oil balance. Goldman Sachs projects that the market will swing from a surplus of 1.8 mmbbl/d in 2025 to a deficit of 9.6 mmbbl/d in the second quarter of 2026. This shift underscores the severity of the supply constraints and their potential to sustain upward pressure on prices.

On the demand side, the bank expects global oil consumption to decline by 1.7 mmbbl/d in the second quarter of 2026, with a further annual drop of 100,000 barrels per day (bbl/d) for the full year. The decline is attributed to higher refined product prices, which are expected to weigh on consumption. Analysts warned that if the supply shock persists, deeper demand reductions may be necessary to stabilize the market.

Broader Economic Risks Loom

Goldman Sachs’ report also highlights broader economic risks that could further strain the oil market. These include persistently high refined product prices, the potential for additional supply shortages, and the ongoing geopolitical tensions in the Middle East. The bank’s analysts noted that while the current inventory drawdown is unsustainable in the long term, the immediate outlook remains highly volatile.

The bank’s revised forecast aligns with recent market trends, including the first close of Brent crude futures above $100 per barrel since 2022. While Goldman Sachs does not expect prices to remain at those levels indefinitely, the report suggests that the combination of supply disruptions and inventory declines could keep prices elevated through the end of the year.

Long-Term Implications for Global Markets

The prolonged closure of the Strait of Hormuz and the resulting supply disruptions are expected to have lasting effects on global oil markets. The Wall Street Journal reported that the damage to Persian Gulf oil infrastructure could ripple through the industry long after the conflict subsides, potentially delaying a full recovery in production and exports.

Goldman Sachs’ latest forecast reflects a growing consensus among analysts that the oil market is entering a period of heightened uncertainty. While the bank’s base case assumes a gradual recovery in Middle East production, the report acknowledges that risks remain skewed to the upside, particularly if geopolitical tensions escalate further.

For now, the focus remains on the immediate supply shock and its impact on inventories. The bank’s warning about the need for deeper demand reductions underscores the delicate balance between supply and consumption in an already fragile market.