SKN | Goldman Sachs Cuts Oil Forecasts as Strait of Hormuz Reopening Eases Supply Concerns

Key Takeaways:

• Goldman Sachs lowered its Brent crude forecast to USD 80 per barrel for Q4 2026 from USD 90 and reduced its 2027 average estimate to USD 75 from USD 80.
• The revision follows expectations that Gulf oil exports will normalize faster after a preliminary agreement to reopen the Strait of Hormuz.
• Supply risks remain two-sided, with potential production increases from Gulf producers offset by risks of renewed regional disruption and delays in clearing shipping routes.

Oil Market Outlook Shifts as Supply Disruption Risks Ease

Goldman Sachs has reduced its oil price forecasts after adjusting expectations around Middle East supply disruptions and the potential reopening of the Strait of Hormuz.

The investment bank now expects Brent crude to average USD 80 per barrel in the fourth quarter, down from its previous USD 90 forecast. Its 2027 average Brent estimate was also lowered to USD 75 from USD 80.

The adjustment reflects Goldman’s view that Gulf oil exports could return to pre-conflict levels sooner than previously expected. The bank now assumes normalization by the end of July rather than the end of August.

Strait of Hormuz Remains Central to Global Energy Markets

The Strait of Hormuz has remained a critical factor in the global oil outlook because of its role as a major energy transportation route.

Before its closure, approximately one-fifth of global oil and liquefied natural gas shipments passed through the waterway. The disruption resulted in roughly 14 million barrels per day of production being temporarily shut in.

Following news of a preliminary agreement involving the United States and Iran, oil prices declined. Brent crude futures fell nearly 5% to their lowest level since March 10 before stabilizing, while West Texas Intermediate prices also moved lower.

At the latest reference point in the source, Brent traded at USD 82.94 per barrel and WTI at USD 80.66 per barrel.

Demand Recovery Provides Partial Support

While Goldman lowered its price expectations, the bank also sees improving demand conditions later in the forecast period.

The firm expects a stronger demand recovery during the second half of 2026 and into 2027 as improved affordability supports consumption.

The balance between supply normalization and demand recovery will likely remain a key driver of energy markets. Lower oil prices can support consumers and reduce inflation pressure, but they can also affect energy producers’ cash flows and capital allocation decisions.

Supply Risks Remain Balanced Between Upside and Downside

Goldman Sachs highlighted that Middle East supply risks remain uncertain.

On the upside, the bank noted that Gulf producers could increase output more aggressively, particularly if commercial oil inventories remain low. Saudi Arabia and the United Arab Emirates were identified as producers with potential capacity to respond.

Iran could also potentially exceed pre-conflict production levels if sanctions restrictions are eased.

However, risks remain. A renewed escalation in regional tensions, attacks on shipping routes or delays in clearing possible maritime obstacles could prevent exports from fully recovering.

The bank estimates that restoring Hormuz flows could involve approximately 12 million barrels per day of additional supply compared with current levels.

Investor Implications Across Energy and Global Markets

For global investors, the oil forecast revision reflects a broader shift from immediate supply scarcity concerns toward a market increasingly focused on demand, production discipline and geopolitical stability.

Lower crude assumptions may influence energy-sector earnings expectations, inflation forecasts and central-bank policy considerations. At the same time, uncertainty around Middle East supply routes means energy markets remain highly sensitive to geopolitical developments.

Closing Insights

Goldman Sachs’ revised oil outlook highlights how quickly energy markets can adjust when geopolitical risks appear to moderate. The lower Brent forecasts reflect expectations of faster supply normalization, while the bank continues to acknowledge significant uncertainty around regional stability.

For wealth portfolios exposed to energy, commodities or inflation-sensitive assets, the key variables remain global demand recovery, producer output decisions and the durability of supply-route stability.

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