Goldman lifts Brent, WTI outlook; $120 oil possible if shipping attacks widen

Goldman Sachs has provided traders a defined range for oil prices: $120 per barrel if attacks on shipping expand and escalate, and $80 if Gulf exports return to normal, with Brent crude trading near $97 when the note was published. The $23 range around the current price highlights how two-sided the short-term outlook is, and the bank's decision to raise its Brent and WTI forecasts by $5 each for December 2026 and 2027 indicates that it views the risk balance as leaning toward the upside scenario rather than toward normalization.

The bank's choice to express that risk through natural gas and diesel instead of crude itself is a point worth noting separately, as it suggests Goldman believes the largest supply shock is currently embedded in product and gas markets rather than in crude, a difference that matters for how the risk appears across the energy complex and not just at the crude headline level.

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Earlier, escalation continued:

• Oil jumps at reopen on Saudi strikes, Iran threat to Gulf energy assets

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Goldman has now quantified how severe the Hormuz situation could be for oil, and it is already lifting its base case to approach that level.

Key takeaways:

• Goldman Sachs projects oil could climb to as much as $120 per barrel if Middle East shipping attacks intensify, with Brent last around $97.
• The bank's bearish case is $80 per barrel if regional exports return to normal.
• Goldman increased its Brent and WTI price projections by $5 each, to $85 and $80 for December 2026, and to $80 and $75 for 2027.
• According to the bank, Brent could surpass $120 per barrel if average Gulf production in 2027 stays 4 million barrels per day below pre-war levels.
• Goldman advises hedging geopolitical risk through long positions in natural gas and diesel instead of crude, citing larger supply shocks in those markets.
• Diesel prices have more than doubled this year, and Goldman expects China to keep acting as a stabilizing force in the crude market by reducing imports when prices are high.

Goldman Sachs has outlined a broad range for oil prices depending on how the Strait of Hormuz standoff develops, noting a possible rally to $120 per barrel if Middle East shipping attacks increase, versus a lower target of $80 if regional exports normalize. Brent was around $97 when the bank's commodities team issued the note. The bank has since upgraded its own forecasts, raising both Brent and WTI by $5 to $85 and $80 for December 2026, and to $80 and $75 for 2027, also noting that Brent could exceed $120 if average Gulf output through 2027 remains roughly 4 million barrels per day below pre-war levels.

Daan Struyven, Goldman's co-head of global commodities research, stated that the risk of shipping disruptions widening and escalating has grown more significant in light of recent events. Crude oil has risen to its highest since July as the US and Iran remain in a standoff over the strait, with the US striking Iranian tankers, Iran declaring a new restricted zone outside the waterway, and US naval forces continuing to blockade Iranian ports while escorting other producers' vessels through the area.

Instead of expressing that risk through crude, Goldman is advising investors to hedge by taking long positions in natural gas and diesel, arguing that the supply shocks in those markets are bigger than in crude. Diesel prices have more than doubled this year, with gains in natural gas and refined products broadly surpassing crude since the conflict intensified over six months ago.

Goldman also expects China to keep acting as a stabilizing force in the crude market specifically, curbing imports in response to high prices, a role that Struyven said Beijing has not assumed in natural gas or refined products. That difference leaves the product and gas markets more vulnerable to the upside scenario Goldman is highlighting, even as crude itself benefits from some demand-side cushioning from China's purchasing behavior.