Goldman Sachs lifts oil price forecast again as supply crunch deepens, demand risks rise

GOLDMAN Sachs has once more raised its oil price outlook, underscoring growing concerns over tightening global supply and escalating geopolitical uncertainty. The investment bank now projects Brent crude to average $90 per barrel in the fourth quarter (Q4) of the year, while West Texas Intermediate (WTI) is expected to average $83 per barrel over the same period.

This revised forecast comes amid already elevated spot prices. At the time of writing on Monday at 9.40am West African time, Brent crude was trading at $108.3 per barrel, while WTI stood at $96.82 per barrel, Oilprice.com reported. The sustained price strength is being driven largely by stalled diplomatic negotiations between Iran and the United States, with uncertainty surrounding when or if talks will resume. The lack of progress has intensified fears of prolonged supply disruptions in the global oil market.

In a note released over the weekend, Goldman Sachs analysts warned that the broader economic risks extend beyond their base oil price projections. They pointed to significant upside risks to crude prices, unusually high refined product prices, and increasing threats of fuel shortages. The analysts also highlighted the unprecedented scale of the current supply shock, which continues to ripple across global energy markets.

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The bank noted that these pressures are already beginning to weigh on demand. According to its estimates, global oil consumption is expected to decline by 1.7 million barrels per day in the current quarter. Looking further ahead, demand in 2026 could fall by about 100,000 barrels per day compared to 2025 levels, reflecting the longer-term impact of persistently high prices and constrained supply.

Goldman Sachs further cautioned that the ongoing drawdown of oil inventories is not sustainable indefinitely. As stockpiles shrink, the market may require even sharper reductions in demand to rebalance, particularly if supply disruptions continue. The bank estimates that lost production in the Middle East currently stands at a staggering 14.5 million barrels per day, amplifying concerns over the depth of the supply gap.

Echoing similar concerns, analysts at ING said the absence of progress in geopolitical negotiations is tightening the market on a daily basis. According to ING, there are limited alternatives to offset a supply shortfall of roughly 13 million barrels per day, leaving prices with little choice but to adjust upward.

ING analysts added that while inventories, both commercial reserves and strategic stockpiles, can provide temporary relief, they are only a short-term solution. The longer the supply crunch persists, the greater the pressure on prices to rise further, which in turn will force demand destruction. Ultimately, they warned that higher prices may become the primary mechanism for restoring balance in the global oil market.