Oil Prices Plummet: Goldman Sachs Slashes Forecasts as Middle East De-escalation Accelerates Gulf Supply Surge

Oil Prices Plummet: Goldman Sachs Slashes Forecasts as Middle East De-escalation Accelerates Gulf Supply Surge​

Goldman Sachs Rewrites Oil Outlook on Geopolitical Shifts​

Goldman Sachs has significantly lowered its crude oil price forecasts following developments linked to an interim regional agreement. This shift reflects expectations for a faster normalization of Persian Gulf supply flows. The bank’s revision hinges on the potential reopening of the Strait of Hormuz and the quicker restoration of export activities in the region.

The brokerage house now assumes that Gulf oil exports will return to pre-conflict levels by the end of July, projecting this recovery timeline one month earlier than previously estimated. This expedited supply rebound has prompted a downward revision across all key crude benchmarks examined by Goldman Sachs.

Detailed Forecast Cuts: Brent and WTI Price Targets Revised​

The revised outlook sees a notable reduction in future price points for major crudes. Goldman Sachs cut its Brent crude forecast to $80 per barrel for the Q4 2026 period, down from the prior estimate of $90. For 2027, the expected average price for Brent was also lowered to $75 per barrel, a reduction from $80.

WTI Crude followed suit in its forecast adjustments. The bank set the WTI average for Q4 2026 at $75 per barrel. It maintained that prices could fall further, projecting the 2027 average for WTI to reach $70 per barrel.

Supply Normalization Expected by Q3 Amid Regional Stabilization​

The acceleration of supply normalization has been calculated as reducing fair value estimates by approximately $10 per barrel in late 2026 and around $5 per barrel in 2027. This adjustment reflects the anticipated faster easing of tightness in regional supplies than initially modeled by the analysts.

This revised projection is built upon expectations that maritime flows will stabilize across the Persian Gulf region. Key producers—including Saudi Arabia, the United Arab Emirates, Iraq, Kuwait, Qatar and Iran—are expected to see continued recovery in their crude exports.

Goldman Sachs confirmed that oil shipments have already begun a partial rebound from earlier disruptions. This initial progress has been aided by improved tanker availability and rerouting efficiency, though full normalization remains contingent on sustained security conditions around the Strait of Hormuz.

Persistent Volatility: Two-Sided Risks Persist in Oil Market​

Despite the downward revision to price targets, Goldman Sachs maintains that two distinct sets of risks remain firmly entrenched within the global oil market. Prices could experience a strong upward movement if geopolitical tensions intensify once more. Another risk is rising Iranian production should it receive sanctions relief or if global demand accelerates beyond current expectations.

Conversely, downside pressures are also significant. Prices face vulnerability if exports normalize even more quickly than anticipated. A sustained weakening of demand or continued constraint on shipping activity due to security concerns could force a swift correction downward.

Looking ahead, the bank still projects a sizable global oil surplus estimated at 3.2 million barrels per day in 2027. However, Goldman Sachs stated that prices will remain supported by structural factors like ongoing strategic stockpiling by OECD economies and a persistent geopolitical risk premium. The market volatility is underscored by potential outcomes where Brent could rise above $130 in a prolonged disruption scenario, or fall below $60 if supply normalizes rapidly alongside weakening demand.