Goldman Sachs raises its crude forecasts and warns of a $120 barrel as Middle East shipping attacks threaten global energy supply
Goldman Sachs has raised its oil price forecasts and put forward a scenario in which crude climbs to $120 a barrel, a warning that carries direct implications for financial advisors managing inflation-sensitive client portfolios amid an escalating conflict over the Strait of Hormuz.
The bank raised its Brent and West Texas Intermediate forecasts by $5 a barrel to $85 and $80 respectively for December 2026, and to $80 and $75 for 2027, while flagging a $120 upside scenario if Middle East shipping attacks intensify and a $80 downside if Gulf exports normalize.
Goldman recommended bets on natural gas and diesel as a way to capture gains from the disruption, arguing those markets face bigger supply shocks than crude itself.
"Events over the last few days do suggest that the risk of shipping disruptions broadening and intensifying is an important one," Daan Struyven, co-head of global commodities research at Goldman Sachs, said in an interview on Bloomberg TV.
What's driving the Strait of Hormuz crisis?
The escalation followed U.S. strikes on three Iranian oil tankers in response to Iran's Islamic Revolutionary Guard Corps targeting two U.S. warships with ballistic missiles.
Since the war erupted with U.S. and Israeli strikes on Iran on February 28, 2026, Iran has increased restrictions on shipping through the Strait of Hormuz, a critical chokepoint for global energy supplies.
An average of 10 commodity ships transited the Strait of Hormuz per day over the past 10 days, the lowest since May, according to shipping data released Monday.
Brent spot futures have climbed to $97, while the options-implied probability of Brent topping $100 in March 2027 has jumped to approximately 25%, from roughly 6% a month ago, according to Goldman's strategists.
Brent could exceed $120 a barrel if 2027 average Gulf output remains 4 million barrels a day below pre-war levels, according to the bank. Struyven said crude prices could instead fall toward $80 per barrel if oil exports from the Middle East return to normal levels, highlighting the unusually wide range of possible outcomes facing the market.
How advisors are positioning client portfolios
The Goldman note lands at a moment when energy-sector positioning has become one of the defining questions of 2026.
Headline inflation has ticked higher due to energy shocks, while core inflation remains above the Federal Reserve's target, limiting the central bank's room to maneuver on rates.
Goldman's preference for natural gas and diesel over crude is notable for advisors evaluating commodity-linked exposure.
Diesel prices have more than doubled this year, with China expected to continue acting as a stabilizing force in the crude market by curbing imports at elevated prices.
Goldman said it continues to recommend hedging geopolitical risk through deferred March 2027 to December 2027 European diesel timespreads, which it said would rise more than 100% if persistent Russian or Middle East refinery outages keep the nearby nine-month spread near current levels.
The bank's recommendation to express the geopolitical risk through refined-product markets rather than crude reflects a view that physical supply constraints downstream - in fueling transportation networks, heating systems and industrial operations - are likely to prove more durable than any disruption to headline crude flows alone.
According to the World Bank's Commodity Markets Outlook released in April 2026, energy prices are projected to surge by 24% in 2026 to their highest level since Russia's invasion of Ukraine.
The Federal Reserve's decision to hold interest rates steady at 3.50–3.75% reflects the bind higher energy costs have created, as elevated prices feed into broader inflation concerns and limit the central bank's ability to cut rates.
