Brent crude, the international oil benchmark, is projected to reach $90 per barrel by December 2026 — a 6 per cent upward revision from an earlier forecast of $85 — according to a report by Goldman Sachs, which cited persistent supply-side risks stemming from the West Asia conflict as the primary driver of an elevated risk premium in time spreads.

Why the Forecast Was Revised Upward

Goldman Sachs attributed the December 2026 upward revision to 'ongoing downside risks to supply likely to slow the moderation in the time spreads risk premium — which we estimate at just over $20 today.' The bank also pointed to low inventories, interest-rate sensitivity, and demand for physical restocking and financial hedging as supporting factors for higher prices.

Notably, the revised $90 forecast still sits nearly 13 per cent below the current market price of approximately $103 per barrel, suggesting the bank anticipates some easing from current elevated levels even as its near-term outlook hardens.

The West Asia Conflict and Its Oil Market Impact

When the West Asia war erupted in late February 2026, Brent crude was trading around $70 per barrel. It surged to over $125 per barrel as disruptions to shipping through the Strait of Hormuz — a chokepoint handling nearly 20 per cent of the world's oil shipments — rattled global supply chains. A gradual reopening of the strait allowed prices to moderate toward pre-war levels before oil climbed back to test the $100 per barrel mark.

According to the Goldman Sachs report, the most likely upside triggers going forward include damage to oil infrastructure, intensified shipping attacks, and a more persistent risk premium.

Goldman Sachs 2027 Outlook: Base Case and Upside Scenario

The bank kept its 2027 average Brent forecast unchanged at $80 per barrel, describing it as a balance between 'downward price pressure from faster-than-expected adaptation in Gulf supply against a slower moderation in the risk premium.' For West Texas Intermediate (WTI), Goldman Sachs projected an average of $81 in December 2026 and $73 in 2027, with the unusually wide WTI-to-Brent spread attributed to elevated US-to-Europe shipping costs.

In a more severe upside scenario, Brent could average as high as $125 per barrel in 2027 if average Gulf output remains 5 million barrels per day (mb/d) below February 2026 levels, compared to the base-case assumption of just 0.3 mb/d below those levels.

What This Means for India

India, which imports over 85 per cent of its crude oil requirements, remains acutely exposed to sustained price elevation. Elevated Brent levels feed directly into India's import bill, widen the current account deficit, and can stoke domestic fuel inflation — complicating the Reserve Bank of India's (RBI) inflation management calculus. The trajectory of the West Asia conflict and any further disruption to Strait of Hormuz transit will be closely watched by policymakers and markets alike in the weeks ahead.