Goldman Sachs released a new research report on Monday (September 7), raising its price forecasts for Brent crude and West Texas Intermediate crude oil by $5 per barrel for December 2026 and December 2027 respectively. The core reason given is that the duration of shipping disruptions in the Middle East may exceed previous expectations. This price adjustment comes against the backdrop of escalating US-Iran conflict and a sharp drop in traffic in the Strait of Hormuz, indicating a repricing of geopolitical risk premiums in the global energy market.

I. Forecast Adjustment: Baseline Scenario Upgraded Across the Board

A report by Goldman Sachs analysts, including Daan Struyven, revised the December 2026 price forecast for Brent crude to $85 per barrel, and the 2027 forecast to $80 per barrel; the December 2026 forecast for WTI crude is $80 per barrel, and the 2027 forecast is $75 per barrel. While the upward revision is only $5 per barrel, the signal is clear – Goldman Sachs believes that the disruption to Middle Eastern shipping is not a short-term disturbance but will continue into 2027. It is noteworthy that the upward revision is relatively limited. Goldman Sachs explained in the report that since the outbreak of the conflict, commercial onshore inventories in OECD countries have hardly seen significant depletion, indicating that the actual crude oil supply gap is smaller than previously expected by the market. Even if shipping disruptions continue, analysts expect the Middle East supply can be addressed through adjustments – the scale of "covert crude oil circulation" will further expand, and multiple pipelines will gradually come online by the end of 2027.

II. Sharp Drop in Traffic Volume: Increased Pressure on the Strait of Hormuz

The deterioration in shipping data was the direct trigger for this upward revision of the forecast. Data from ship tracking agency MarineTraffic shows that vessel traffic through the Strait of Hormuz decreased by 28% to 77 vessels; among them, cargo voyages dropped from 45 to 33, and the number of sanctioned vessels and shadow fleets decreased from 50 to 23. According to data from Kepler, an average of only 10 commodity ships passed through the Strait of Hormuz per day over the past 10 days, the lowest level since May. Only 5 ships passed through on September 6th, and only two on September 5th. Iran's stance further exacerbated market concerns. On September 6th, Rezaei, Secretary of Iran's Supreme National Security Council, stated that Iran would establish a new restricted area outside the Strait of Hormuz, extending from the US Navy's "blockade line" to parts of the Persian Gulf, and any vessels entering this area illegally would be added to Iran's sanctions list. The Iranian Foreign Ministry spokesperson also stated that the US's "aggressive actions" were the root cause of the insecurity in the Strait.

III. Extreme Scenario: Upside risk of $120 and downside potential of $60

Goldman Sachs, in its report, outlined two extreme scenarios, clearly demonstrating the sensitivity of oil price movements to shipping risks. In the upside scenario, if average Gulf region crude oil production in 2027 is 4 million barrels per day lower than pre-war levels—compared to Goldman Sachs' baseline scenario of a 500,000 barrel per day gap—Brent crude prices could rise above $120 per barrel. Struve, co-head of global commodities research at Goldman Sachs, pointed out that a series of events in recent days indicate that the further expansion of shipping disruptions and the continued escalation of risks have become significant market variables. In the downside scenario, if average Gulf region crude oil production is 1 million barrels per day higher than pre-war levels, Brent crude prices could fall to the $60 range in 2027. This $50-plus range between $120 and $60 means that future oil price movements are highly dependent on the evolution of shipping risks. It is worth noting that Brent crude is currently approaching $97 per barrel, and WTI crude is near $92 per barrel. Goldman Sachs’ benchmark forecast ($85/barrel) is actually lower than the current market price, which suggests that the market has already priced in a considerable degree of geopolitical risk premium.

IV. Hedging Strategies: The Tactical Value of Natural Gas and Diesel

Regarding specific trading recommendations, Goldman Sachs did not simply suggest chasing the rise in crude oil, but rather favored energy commodities such as natural gas and diesel. The logic is that if shipping disruptions spread further, the refined oil and natural gas markets could face more severe supply shocks than crude oil. The report specifically points out: "We still recommend hedging geopolitical risks through the European diesel forward spread from March to December 2027. If Russian or Middle Eastern refineries continue to shut down, causing the near-near-nine-month spread to remain near current levels, the spread will increase by more than 100%." The diesel market is already showing clear signs of tightness—US diesel prices have hit record highs, and European diesel crack margins remain high. From a supply chain perspective, when both crude oil transportation and refinery supply are disrupted, products such as diesel, marine fuel, and gasoline may experience more pronounced regional shortages than crude oil. If the price increase of refined energy products significantly exceeds that of crude oil, it means the market is shifting from simply trading geopolitical risks to trading actual supply shortages, at which point the impact of inflation may also significantly expand.

V. Macroeconomic Spillovers: The Chain Reaction of Inflation and Monetary Policy

The impact of rising oil prices is not limited to the energy market. Stronger-than-expected US non-farm payroll data for August has increased market bets on a September rate hike by the Federal Reserve. If energy prices continue to rise sharply, the US Consumer Price Index (CPI) may face new upward pressure, further complicating the Fed's policy decisions. In an interview on September 6, US Energy Secretary Chris Wright stated that Washington may ultimately not sign a nuclear agreement with Tehran, adding that "an agreement may not be reached until the next Iranian government takes office." This statement was interpreted by the market as a dimming prospect for a diplomatic solution, further reinforcing the logic of continued geopolitical risks.

Editor's Summary

Goldman Sachs' upward revision of its oil price forecast is not primarily driven by direct production cuts, but rather by systemic disruptions to shipping in the Strait of Hormuz, a global energy chokepoint. A combination of factors—lowest traffic volume since May, Iran's announcement of a new restricted zone, and a bleak prospect of a diplomatic solution between the US and Iran—has led the market to reassess the likelihood of prolonged disruptions to Middle Eastern oil transport. While the baseline Brent crude forecast of $85/barrel is below current market prices, the upside scenario of $120 suggests the risk balance remains tilted upwards. Notably, Goldman Sachs tactically recommends natural gas and diesel as hedging tools, reflecting its assessment of risks across the entire production-transportation-refining-finished product chain—the refined product market may face more direct supply shocks than crude oil itself. The transmission effect of rising oil prices through inflation on global monetary policy will also be a key focus for the market going forward.

Frequently Asked Questions

Q1: What are the specific amounts and figures for Goldman Sachs' recent upward revision of its oil price forecasts? Goldman Sachs raised its December 2026 Brent crude oil price forecast by $5 to $85 per barrel and its WTI crude oil forecast by $5 to $80 per barrel; its 2027 forecast for Brent is $80 per barrel and for WTI is $75 per barrel. This adjustment was released on September 7th, based primarily on the assumption that shipping disruptions in the Middle East will continue into 2027. Q2: To what extent has the situation in the Strait of Hormuz deteriorated? According to MarineTraffic data, vessel traffic in the Strait of Hormuz has decreased by 28% to 77 vessels, with cargo voyages dropping from 45 to 33. Over the past 10 days, an average of only 10 merchant ships have passed through daily, the lowest level since May. Iran has also announced the establishment of a new restricted area outside the strait, further exacerbating shipping uncertainty. Q3: How was Goldman Sachs' extreme scenario of $120 per barrel derived? If average crude oil production in the Gulf region is 4 million barrels per day lower than pre-war levels in 2027—while Goldman Sachs' baseline scenario assumes a shortfall of only 500,000 barrels per day—Brent crude prices could rise to over $120 per barrel. This scenario presupposes a continued expansion of shipping attacks and systemic bottlenecks in transportation. Question 4: Since Goldman Sachs has raised its forecast, why is the current market price higher than its baseline forecast? Brent crude is currently approaching $97 per barrel. The market has already priced in a significant geopolitical risk premium, while Goldman Sachs' baseline forecast of $85 is based on a neutral scenario of "continued but manageable" shipping disruptions. The difference between the two precisely reflects the market's pricing in the extreme scenario. Question 5: How does Goldman Sachs advise investors to hedge this geopolitical risk? Goldman Sachs recommends hedging the risk through the European diesel forward spread from March to December 2027, believing that if Russian or Middle Eastern refineries continue to shut down, this spread will increase by more than 100%. The logic is that the refined oil and natural gas markets may face a more severe supply shock than crude oil, and the diesel market has already shown clear signs of tightness. At 08:56 Beijing time, Brent crude oil was trading at $96.94 per barrel.