Goldman Sachs raises oil price forecasts, sees Brent upside at US$140 a barrel

NEW YORK: Goldman Sachs raised its oil price forecasts on Sunday due to elevated supply risks and said Brent could rise to US$140 a barrel in 2027 if Gulf oil output stays 3.5 million bpd below its 2025 average.

The bank raised its December Brent crude oil price forecast to US$105 a barrel from US$90, and raised its US West Texas Intermediate (WTI) forecast to US$94 a barrel from US$81.

Goldman Sachs also raised its average 2027 forecasts to US$88 a barrel for Brent from US$80 previously, and to US$78 a barrel for WTI from US$73.

The bank forecast an upside price scenario where Brent could reach US$140 and average around US$130 in 2027 if average Gulf output in 2027 remains 3.5 million barrels per day below its 2025 average.

Goldman Sachs said it expects markets to price in a higher risk premium, reflecting downside risks to Mideast supply, the length of past major oil supply shocks, and many market participants' view that a lasting diplomatic breakthrough will be difficult to achieve.

"Intensified shipping attacks, damage to oil infrastructure, and a more persistent risk premium remain the key triggers of potential upside," the bank said in a note.

Brent slipped more than one per cent to US$111.84 on Monday after Iranian and Qatari officials held a third straight day of talks aimed at pushing for a deal to end the US-Israeli war with Iran.

However, Brent ended October at its highest level in six months amid concerns that the US-Iran conflict could escalate again after the US midterm elections on Tuesday.

"The Mideast and Russia-Ukraine conflicts, alongside broader geopolitical fragmentation, create high disruption risk, with the timing and location of disruptions nearly impossible to predict," Goldman Sachs said.