Goldman Sachs expects Brent crude to average $80 per barrel in the fourth quarter of 2026, down from its earlier forecast of $90. Its 2027 Brent forecast has also been cut to $75 per barrel from $80. The brokerage has lowered its oil price forecasts after signs of a breakthrough between the US and Iran raised expectations that the Strait of Hormuz could reopen sooner than previously anticipated.
“When we wrote this report, we still had oil assumptions at around $90 a barrel. Our commodities team has already cut that forecast closer to $85, and into the $70s for 2027,” said Santanu Sengupta, Chief India Economist at Goldman Sachs. “The price effect is already better than what we had anticipated.”
The revision follows President Donald Trump's announcement of an interim agreement aimed at lifting the US blockade and restoring shipping through the Strait of Hormuz.
Goldman also noted that India's economy is becoming less vulnerable to oil shocks. According to Sengupta, higher crude prices are increasingly leading to demand moderation and a quicker shift towards alternative energy sources. “We are finding that India is generally able to shift quickly into alternate fuels, and the sensitivity to higher oil prices has increased,” he said. “That helps explain the resilience we've seen in the economy despite elevated energy prices.”
Goldman now assumes Gulf oil exports will return to pre-war levels by the end of July, a month earlier than its previous estimate.
According to Goldman Sachs, Gulf oil flows have already recovered significantly from the lows seen earlier this year. It estimates that exports have risen from less than 30% of normal levels in early March to nearly half of normal levels by mid-June, aided by alternative routes and partial resumption of shipments.
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Still Not Out Of Danger
Despite the more bearish outlook, Goldman Sachs stopped short of declaring the oil market out of danger. It highlighted several risks that could derail the recovery, including renewed hostilities in the region, attacks on commercial vessels, delays in clearing maritime routes and the possibility that political negotiations between Washington and Tehran break down.
The bank sees several upside risks that could keep crude prices elevated. These include a renewed outbreak of hostilities in the region, attacks on commercial vessels that keep shipping companies reluctant to return to the Strait of Hormuz, delays in mine-clearing operations, or a collapse in nuclear negotiations that prompts Iran to effectively shut the waterway again. In such a scenario, supply disruptions could persist well into next year.
At the same time, Goldman notes that supply could recover more quickly than expected. Gulf exports could return to normal levels as early as July rather than the bank's current end-July assumption. Additional production from the UAE, Brazil and the US, combined with weaker global demand growth, could also weigh on prices. Persistently lower demand due to recent high prices remains another downside risk for crude.
The bank's forecast range highlights the unusually wide range of outcomes facing the oil market. In its base case, Goldman expects Brent crude to average around $80 a barrel in the fourth quarter of 2026 and $75 in 2027.
In a downside scenario where supply recovers faster and demand remains soft, Brent could fall to just under $70 by late 2026 and slip below $60 in 2027. Conversely, if Hormuz disruptions persist and regional tensions escalate again, Brent could climb above $130 a barrel in late 2026 and average around $105 in 2027.
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