Bigger numbers, same surplus
Goldman Sachs raised its fourth-quarter 2026 Brent crude forecast to $60 per barrel and WTI to $56, an increase of $6 across both benchmarks, the bank said in a note on Sunday cited by Reuters.
For the full year, Goldman now expects Brent to average $64, up from $56 previously, and WTI to average $60, up from $52.
Lower-than-expected crude inventories across OECD nations drove the revision. Stock levels have come in tighter than the bank anticipated, leaving what Goldman described as a smaller cushion against demand surprises or supply interruptions.
Brent crude last traded at $71.05 per barrel, while WTI stood at $66.31. Both benchmarks gained roughly 6% last week after Vice President Vance said military strikes on Iran remained on the table.
The math behind $60
Goldman's Q4 Brent target of $60 bakes in two assumptions: a $6 geopolitical risk premium that fades as tensions ease, and a $5 decline in crude's fair value as OECD inventories gradually rebuild.
The bank still projects a global oil surplus of 2.3 million barrels per day in 2026. That number has not changed. What shifted was the starting point: inventories are lower than expected right now, so prices need to come down from a higher level.
Goldman also expects OPEC+ to begin restoring output in the second quarter, adding barrels into a market already running a surplus.
What could go wrong
The bank flagged two scenarios that would push prices lower still. If sanctions on Iran or Russia are eased, unlocking additional supply, Brent could fall $5 below the forecast and WTI could drop $8 in the fourth quarter. A quick resolution on either front would accelerate stock builds and remove the geopolitical premium faster.
On the flip side, Goldman's base case assumes no major supply disruption from the ongoing US-Iran standoff. If that assumption breaks, prices would move higher. Energy consultancy FGE NexantECA warned separately on Sunday that $90 to $100 oil was within reach if conflict escalates.
Looking further out
Goldman sees Brent averaging $65 in 2027 and climbing to $70 by December of that year. WTI tracks at $61 and $66 respectively. That trajectory suggests the bank expects the surplus to tighten, with demand catching up to supply growth over the next two years.
For now, oil sits in an awkward spot. Brent above $71 is well north of Goldman's year-end target, which means either the geopolitical premium sticks around longer than the bank expects, or a meaningful pullback lies ahead.