Goldman Sachs expects crude prices to ease in 2027 (Img: IANS)
New Delhi: Global crude oil prices could fall to around $80 a barrel in 2027 as Middle Eastern supplies recover and the market moves towards a surplus, according to a new report by Goldman Sachs.
However, the investment bank warned that a fresh escalation in the US-Israel-Iran conflict could keep prices elevated for longer, with supply disruptions continuing to pose risks to the global oil market.
Revising its near-term outlook, Goldman Sachs projected benchmark Brent crude to reach $90 a barrel in December 2026, up from its earlier forecast of $85. It expects prices to average $80 a barrel in 2027.
The bank said recovering Middle Eastern oil exports, increased production outside the Persian Gulf and weakening demand had significantly narrowed the global supply deficit.
As exporters adjusted to the conflict and expanded transportation capacity, Persian Gulf oil exports had returned to around their 2025 average by late September.
Despite the improvement in supply, uncertainty over the conflict continues to support prices. Physical Brent crude for near-term delivery has exceeded $130 a barrel, while benchmark Brent futures have recently traded above $100.
According to Goldman Sachs, the oil market was close to balance in September, with demand exceeding supply by just 0.3 million barrels per day (mb/d). This marked a sharp improvement from the deficit of 7.2 mb/d recorded in March.
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The bank expects the global oil market to move into surplus in the fourth quarter of 2026 and remain in surplus through 2027, a shift that could put downward pressure on prices.
However, crude currently carries a risk premium of around $25 a barrel, reflecting the possibility of further supply disruptions and additional inventory drawdowns if the conflict intensifies.
On the demand side, global oil consumption has weakened, particularly in China, the Middle East and developed Asian economies.
Goldman Sachs expects demand to recover gradually as refined oil products become more readily available and affordable. Until then, subdued consumption could contribute to the projected market surplus and help ease prices over the longer term.
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Brent crude touched $110 a barrel over the weekend for the first time since May, as hopes of near-term supply relief faded and traders increased their bets on further price gains.
The benchmark rose 3.7 per cent during a session marked by renewed conflict in major oil-exporting regions, adding to concerns over an already fragile supply outlook.
Missile and drone strikes by Iran-backed Houthi rebels on Saudi Arabia have further complicated the outlook. Meanwhile, Russia and Ukraine have continued to attack each other’s energy infrastructure, adding to concerns about potential disruptions.
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The contrasting trends leave the oil market caught between expectations of improving supply and a potential surplus in 2027, and immediate geopolitical risks that could keep prices high. Goldman Sachs’ forecast for lower prices therefore depends in part on the recovery in exports and the absence of a major escalation in the conflict.
