Investing.com — Goldman Sachs has raised its oil price outlook, citing significant disruptions to Middle Eastern supply flows and expectations of sharp inventory declines as the market grapples with reduced shipments through the Strait of Hormuz.
crude has already rallied strongly, climbing 34% year-to-date to about $82 a barrel as oil flows through the Strait of Hormuz dropped sharply, energy infrastructure suffered damage, and storage congestion forced Iraq to cut production by nearly 1.5 million barrels per day.
Goldman now expects Brent to trade in the mid-$80s during March as markets digest conflicting signals. On one hand, flows through the strait could gradually recover; on the other, evidence of production shut-ins and supply losses continues to emerge.
The bank said it is raising its 2026 second-quarter average forecast for Brent by $10 to $76 per barrel from $66 previously, while lifting its estimate for U.S. benchmark WTI by $9 to $71 from $62.
The revision reflects two assumptions. First, Goldman strategists expect continued supply disruption in the near term. They assume that exports through the Strait of Hormuz remain at roughly 15% of normal levels for about five more days before gradually recovering to 70% over two weeks and then returning to full capacity in the following two weeks.
“Under our assumption of substantial March Hormuz disruptions, we estimate about 200mb of Middle Eastern crude production losses and large draws in OECD commercial inventories in March,” strategists led by Daan Struyven wrote. Inventories are projected to fall by about 76 million barrels month-on-month, compared with a previous assumption of a 10 million barrel build.
Furthermore, Goldman expects geopolitical uncertainty to continue supporting oil prices. The strategists said that “lingering geopolitical uncertainty, about Iran and Russia-Ukraine, will continue to support the risk premium in 2026Q2.”
Further out, the bank made smaller upward revisions to its forecasts. It now sees Brent averaging $66 in the fourth quarter of 2026, up from $60 previously, and $70 in 2027, compared with $65 before. WTI is expected to average $62 in late 2026 and $66 in 2027.
Goldman still expects prices to ease from current levels as the risk premium fades and inventories begin rebuilding once disruptions subside. Its baseline scenario assumes Brent declines from roughly $82 today to around $66 by the fourth quarter of 2026.
Even so, strategists said risks remain “significantly skewed to the upside.” These include “lengthier disruptions to Hormuz exports and damage to oil production facilities.”
For instance, if exports through the Strait of Hormuz were to remain depressed for five additional weeks, Goldman estimates Brent could climb to around $100 per barrel as markets adjust to prevent inventories from falling to critically low levels.
On the flip side, a quicker normalization of Hormuz flows represents the main downside risk to oil prices.