Why Goldman Sachs Raised Its Oil Forecast but Still Sees Brent Falling

Goldman Sachs’s higher oil forecast is not a call for September’s prices to last indefinitely. The bank raised its December 2026 targets by $5, to $85 a barrel for Brent and $80 for WTI, because it expects Middle East shipping disruptions to persist. But $85 is still below Brent’s recent trading levels: Reuters reported a price of $107.81 on September 14.1249

How can a higher forecast imply a price decline?

The comparison is between two different things. Goldman raised its previous December forecast, not its estimate of the current price. A disruption that lasts longer than expected can lift the year-end baseline even if some of today’s fear of further escalation fades and more oil reaches buyers. The U.S. Energy Information Administration expects flows through the Strait of Hormuz and alternative routes to increase gradually, while export constraints persist through year-end.48

Weaker demand is another counterweight. In its September outlook, the International Energy Agency forecast that global oil consumption would fall by 2.5 million barrels a day in 2026. That does not mean the market is comfortable: the IEA also forecast a 5.7-million-barrel-a-day decline in supply.3332 Falling demand and a physical shortage can occur at the same time.

What could break the $85 scenario?

The test is whether lost Gulf exports actually recover. A report summarizing the IEA’s September findings put August oil flows through Hormuz at 7.6 million barrels a day, 13.1 million below prewar levels.38 A separate September 14 report said Saudi Arabia’s East-West pipeline, a route that bypasses the strait, remained shut after drone strikes. That reported outage came after Goldman’s early-September forecast revision, so it should be treated as a subsequent risk to the outlook rather than its original rationale; the available reporting does not establish how long the shutdown lasted.1512

Goldman’s upside case is therefore materially different from its $85 baseline. Reporting on the bank’s scenarios says Brent could exceed $120 in 2027 if Gulf output averages 4 million barrels a day below prewar levels, versus a 0.5-million-barrel-a-day shortfall in its base case.2 Reuters separately reported a warning that intensified attacks on Middle East shipping could send oil as high as $120. Neither is the bank’s central forecast.51

Why falling crude may not quickly ease Asian inflation

Crude is only one part of the energy bill. Goldman-linked reporting said LNG and diesel had reached fresh 2026 highs and that higher energy costs were expected to appear in September import and producer prices across Asia-Pacific.54 The IEA reported severe constraints on Gulf diesel exports, illustrating why refined-fuel prices can remain under pressure even if Brent retreats.58

Consumer prices may respond later or less visibly where governments stabilize energy prices. The Asian Development Bank says such subsidies have tempered the pass-through of high global energy costs, but at a fiscal cost. Its September forecast puts inflation in developing Asia and the Pacific at 4.2% in 2026—not “4.2026%”—and 3.5% in 2027, compared with 3.0% in 2025.2423 Those regional averages do not describe every country: reporting on Goldman’s forecasts places its 2027 inflation estimates furthest above consensus in India and Malaysia, and furthest below in Japan, Vietnam and the Philippines.22

The distinction running through both outlooks is between moderation and normalization. Brent can fall from a disruption-driven spike without Gulf exports fully recovering; Asian inflation can ease without energy costs returning to their earlier levels.4824