Crude oil prices may ease to $80 by 2027 as supply recovers: Goldman Sachs
Synopsis
Goldman Sachs has revised its Brent crude forecast sharply upward to $90 for December 2026 — even as it sees prices falling back to $80 by 2027 on a supply surplus. With physical Brent above $130 and a $25 conflict premium baked in, the path from here to there runs straight through the Middle East.
Key Takeaways
Goldman Sachs forecasts Brent crude at $90/barrel in December 2026 , up from a prior estimate of $85 .
Prices are expected to average $80/barrel in 2027 as the global oil market moves into surplus.
Physical Brent for near-term delivery has exceeded $130/barrel ; benchmark futures recently traded above $100 .
The supply deficit narrowed from 7.2 mb/d in March to just 0.3 mb/d in September .
A conflict risk premium of approximately $25/barrel remains priced into crude.
Demand weakness in China , the Middle East , and developed Asian economies is also contributing to the surplus outlook.
Global crude oil prices are likely to ease to nearly $80 a barrel by 2027 as Middle East supplies recover and the oil market shifts toward a surplus, according to a new report by Goldman Sachs. The investment bank's revised outlook, released on 17 October 2026, reflects a sharp narrowing of the global supply deficit over recent months — but flags ongoing conflict-driven risks that could keep prices elevated in the near term.
Goldman Sachs Revises Brent Forecast Upward for 2026
Goldman Sachs now forecasts benchmark Brent crude at $90 a barrel in December 2026, revised up from a previous estimate of $85, before averaging $80 in 2027. The bank also noted that renewed escalation in the US-Israel-Iran conflict could keep prices higher for longer, adding a layer of uncertainty to an otherwise improving supply picture.
Notably, physical Brent crude prices for near-term delivery have exceeded $130 per barrel, while benchmark Brent futures have recently traded above $100. Brent crude touched $110 a barrel over the weekend for the first time since May, climbing 3.7% in a single session as renewed conflict in major export regions tightened an already fragile supply outlook.
Supply Recovery Narrowing the Global Deficit
The recovery in Middle Eastern oil exports, higher production outside the Persian Gulf, and weakening demand have together sharply narrowed the global supply deficit. The market was nearly balanced in September, with demand exceeding supply by just 0.3 million barrels per day (mb/d) — down dramatically from a deficit of 7.2 mb/d in March.
As exporters adapted to the ongoing conflict and expanded transportation capacity, Persian Gulf oil exports had reportedly recovered to around their 2025 average by late September. Goldman Sachs forecasts the global oil market to move into a surplus in Q4 2026 and remain in surplus through 2027, underpinning its lower price outlook.
Conflict Risks Keep a $25 Premium Baked In
Crude prices currently include a risk premium of approximately $25 per barrel, according to the report, reflecting the probability of supply disruptions and additional inventory drawdowns if the conflict escalates further. Iran-backed Houthi rebels have continued missile and drone strikes on Saudi Arabia, weighing on the supply outlook, while Russia and Ukraine have also attacked each other's energy infrastructure — compounding market anxiety.
This comes amid a broader pattern of geopolitical shocks driving outsized oil price swings. The current premium of $25 is among the largest conflict-related premiums factored into Brent in recent years, according to the report's analysis.
Demand Weakness in China and Developed Asia
On the demand side, global oil consumption has weakened notably in China, the Middle East, and developed Asian economies. Goldman Sachs forecasts demand to recover gradually as the availability and affordability of refined oil products improve — a trend that, combined with rising supply, supports the move to surplus.
The trajectory of Brent over the next 12 months will hinge largely on whether conflict escalation materialises, how quickly Persian Gulf production scales up, and whether China's demand recovers faster than expected.
Point of View
And that demand weakness — particularly in China — persists long enough to flip the market into surplus. Both assumptions are fragile. Physical Brent above $130 and a $25 risk premium suggest traders are pricing a very different scenario. The gap between the bank's 2027 average of $80 and today's spot price is not a forecast — it is a geopolitical wager. India, as one of the world's largest crude importers, has the most riding on which scenario proves correct: a $25 swing per barrel translates into tens of thousands of crores in import costs and directly pressures the rupee, the current account deficit, and retail fuel prices.
NationPress
17 Oct 2026
Frequently Asked Questions
What is Goldman Sachs's crude oil price forecast for 2027?
Goldman Sachs forecasts benchmark Brent crude to average $80 per barrel in 2027, as the global oil market moves into surplus driven by recovering Middle East supply and weaker demand. The bank also revised its December 2026 Brent estimate up to $90 per barrel from $85.
Why are crude oil prices still elevated despite improving supply?
Crude prices remain elevated because of a conflict risk premium of approximately $25 per barrel, reflecting ongoing geopolitical tensions including Iran-backed Houthi strikes on Saudi Arabia and attacks on Russian and Ukrainian energy infrastructure. Physical Brent for near-term delivery has exceeded $130 per barrel.
How much has the global oil supply deficit narrowed?
The global oil supply deficit narrowed sharply from 7.2 million barrels per day in March to just 0.3 million barrels per day in September, according to the Goldman Sachs report. The bank expects the market to shift into surplus in Q4 2026.
Which countries are seeing weaker oil demand?
Global oil demand has weakened primarily in China, the Middle East, and developed Asian economies, according to the Goldman Sachs report. Demand is forecast to recover gradually as the availability and affordability of refined products improve.
How does this crude oil outlook affect India?
India is one of the world's largest crude oil importers, so a sustained easing toward $80 per barrel by 2027 would significantly reduce the country's import bill, ease pressure on the rupee, and create room for lower retail fuel prices. However, the near-term risk premium above $100 continues to weigh on India's current account deficit.
