Goldman Raises Brent Forecast by 17% but Target Still Lags Market

Goldman Sachs has revised its December Brent crude projection upward to $105 per barrel, citing high supply disruption risk. The updated call is 17% above the $90 Goldman projected in October.

On November 2, Brent was trading at $110.40, which puts the upgraded target roughly 5% beneath the market price. WTI follows the same pattern, as the bank's $94 call lags the prevailing $101.06.

Even for those long crude, the updated Goldman outlook points to oil softening by December.

Goldman Now Bakes In Hard-to-Time Disruptions

Goldman linked the revision to supply threats from two distinct conflicts. The case was laid out in a note from a team led by Daan Struyven, according to CNBC.

"The Mideast and Russia-Ukraine conflicts, alongside broader geopolitical fragmentation, create high disruption risk," the bank wrote.

Consequently, Goldman's base case for 2027 now carries an allowance of 1 million barrels per day for global supply disruptions. The timing and location of such disruptions are almost impossible to anticipate, the bank said.

Goldman sees the market pricing in a bigger risk premium, since many traders think a durable diplomatic breakthrough will be hard to achieve. Iran claimed last week that mines had struck four tankers near the Strait of Hormuz, a claim US forces challenged.

This represents a shift from mid-October, when Goldman's base case saw Middle East supply adjusting and eventually driving prices down.

How Much Longer Can Oil's War Premium Hold?

Other forecasters also see Brent worth less than its current price. A JPMorgan model last week placed Brent's fair value at $94, versus a market price close to $114.

The JPMorgan analysts found no way to tie that gap to shipping costs. That makes geopolitical risk the more likely cause. That gap is what analysts commonly refer to as oil's war premium. In the past, periods when prices ran more than 5% above fair value have lasted 3.8 months on average.

Forecasters Line Up on December, Diverge on 2027

Near-term calls are bunched closely, but the differences widen for next year. BMI, the research arm of Fitch Solutions, sees Brent averaging $107 in the current quarter.

BMI forecasts a 2027 average of $81, a level below Goldman's $88. BMI does not foresee a Hormuz agreement before the first quarter of 2027. Once an agreement is reached, the firm expects a sharp slide, leaving Brent to average $67 by late 2027.

An Iran decision, or headway toward a Hormuz deal, would reveal which 2027 projection traders price in first.