Goldman Sachs Raises Year-End Brent Forecast to $105 on Middle East Supply Disruption Fears
Summary
- Goldman Sachs said it raised its December Brent crude price forecast for this year to $105 a barrel from $90 to reflect uncertainty over crude supply in the Middle East.
- Goldman Sachs said it set its average Brent price forecast for 2027 at $88 a barrel, taking into account global supply disruptions stemming from the Russia-Ukraine war and military tensions in the Middle East.
- Morgan Stanley and Australia and New Zealand Banking Group, or ANZ, also set their year-end Brent crude price forecasts at $105 a barrel, adding to a series of upward revisions by global investment banks to their international oil price outlooks.
Forecast Trend Report by Period
Goldman Sachs has raised its oil price forecasts to reflect uncertainty over crude supplies stemming from military tensions in the Middle East.
Bloomberg reported on November 2 that Goldman, in a report dated November 1, lifted its December Brent forecast to $105 a barrel from $90. It also raised its estimate for the average 2027 Brent price by 10% to $88 a barrel. The bank increased its outlook for West Texas Intermediate as well.
Analysts including Daan Struyven and Yulia Zhestkova Grigsby wrote that the risk of disruptions to Middle East oil supply would keep a large risk premium in crude prices for the time being. They added that markets are pricing in a greater possibility of an escalation in military conflict after the U.S. midterm elections than before.
Oil prices continued to rise last month even though Middle East crude supply had recovered to near prewar levels. Brent climbed 14% in October to its highest level in six months. Geopolitical concerns supported the rally after U.S. President Donald Trump repeatedly mentioned the possibility of resuming airstrikes on Iran after the midterm elections.
Iran is also preparing for the possibility of further attacks by the U.S. and Israel. Reports said the country's supreme leader instructed military commanders to prepare for a new military clash. Goldman said oil prices could rise further if attacks on ships expand and energy infrastructure is damaged.
The revised forecasts also reflected supply risks tied to the war between Russia and Ukraine. Goldman said it built a global supply disruption of 1 million barrels a day into its 2027 base-case forecast, citing the difficulty of predicting when and where disruptions to crude production and transport may occur.
Other global investment banks are also raising their oil forecasts. Morgan Stanley lifted its fourth-quarter spot Brent forecast to $105 a barrel, while Australia and New Zealand Banking Group, or ANZ, also projected year-end Brent futures at the same level.
Brent futures traded lower on the day at around $110 a barrel. Markets are focused on whether changes in the Middle East after the U.S. midterm elections, along with supply conditions among major producers, will shape the next move in oil prices.
