Goldman’s $105 Oil Call Still Has a 5% Haircut 🛢️

Goldman Sachs raised its December Brent crude forecast to $105 per barrel, 17% above its October estimate of $90, citing heightened supply-disruption risks. Brent traded at $110.40 on November 2, leaving Goldman’s new target about 5% below the market. Its $94 WTI forecast also trailed the current $101.06.

Analysts led by Daan Struyven tied the upgrade to risks from two separate conflicts. “The Mideast and Russia-Ukraine conflicts, alongside broader geopolitical fragmentation, create high disruption risk,” the bank wrote, according to CNBC. Goldman’s 2027 base case now includes a global supply disruption allowance of 1 million barrels per day, while the timing and location of potential disruptions remain nearly impossible to predict.

The bank said markets are pricing a higher risk premium as traders expect a lasting diplomatic breakthrough to be difficult. Last week, Iran claimed mines struck four tankers near the Strait of Hormuz, a claim US forces disputed. That represented a shift from mid-October, when Goldman’s base case assumed Middle East supply would adapt and eventually pull prices lower.

Other forecasters also placed fair value below the prevailing oil price. JPMorgan’s model put Brent’s fair value at $94 last week against a market price near $114, and its analysts could not link the difference to shipping costs. Historically, periods more than 5% above fair value lasted 3.8 months on average.

Near-term projections were comparatively close, but forecasts diverged for 2027. BMI, the research unit of Fitch Solutions, expects Brent to average $107 this quarter, then $81 in 2027, below Goldman’s $88 projection. BMI does not expect a Hormuz deal before the first quarter of 2027 and sees Brent averaging $67 by late 2027 once one is reached. A decision on Iran or progress toward a Hormuz deal would indicate which 2027 forecast traders are pricing first.