Wall Street investment bank Goldman Sachs (GS) forecasts that crude oil prices will average $130 U.S. per barrel next year if output from the Middle East remains disrupted.
Daan Struyven, head of oil research at Goldman Sachs, writes in a note to clients that although supply from the Middle East is recovering, there is a high risk of future disruptions in the region.
As such, Brent crude oil, the international benchmark, could reach $140 U.S. a barrel in 2027, and average $130 U.S. throughout next year.
Struyven says that if oil output from the Middle East remains 3.5 million barrels a day below its average in 2025, then the price for crude is sure to move higher in coming months.
Increasing shipping attacks in the Middle East, along with sustained damage to oil refineries, and a risk premium are likely to exert upward pressure on crude prices, writes the analyst.
The new outlook from Goldman Sachs comes days after Brent crude oil got as high as $117 U.S. per barrel amid reports of ongoing attacks by Iran in the Strait of Hormuz shipping lane.
Early on Nov. 2, Brent crude oil is down 4% and trading at $109 U.S. a barrel, while West Texas Intermediate (WTI) crude, the American standard, is also down 4% and trading at $99.78 U.S. a barrel.
Prices are falling on reports of renewed diplomatic efforts between the U.S. and Iran after months of fighting.
Goldman Sachs’ base case for Brent crude oil is for it to average $88 U.S. a barrel next year, up from a previous forecast of $80 U.S., on the assumption that oil supplies steadily rise.
Brent crude oil has risen by nearly 80% since the U.S. and Israel first launched strikes against Iran at the end of February this year.
GS stock has increased 14% over the past year to trade at $894.55 U.S. per share.
