Goldman Sachs Raises Oil Price Forecast Amid Middle East Supply Disruptions

Goldman Sachs has revised its oil price forecast, projecting Brent crude to average $90 per barrel in the fourth quarter of the year and West Texas Intermediate (WTI) to reach $83 per barrel. This adjustment reflects the substantial supply disruptions in the Middle East, particularly due to the blockade of the Strait of Hormuz, which has severely impacted global oil markets.

The International Energy Agency (IEA) has described the current situation as the "largest disruption in history" to oil supply, noting that global oil supply was reduced by 10.1 million barrels per day in March, bringing the total to 97.1 million barrels per day. The IEA also reported that global oil demand is expected to contract by 800,000 barrels per day year-on-year in March and by 2.3 million barrels per day in April.

In response to the crisis, OPEC+ has agreed to increase crude oil production by 206,000 barrels per day starting in May 2026. However, this decision is largely symbolic, as some key members are unable to raise production due to the ongoing conflict.

The IEA has warned that the loss of oil in April will be twice that of March, with more than 12 million barrels lost since the start of the U.S.-Israel war on Iran. The agency also highlighted that the biggest problem is the lack of jet fuel and diesel, which has already affected Asian countries and is expected to impact Europe soon.

Analysts from ING have noted that the lack of progress in peace talks means the market is tightening daily, requiring oil prices to reprice at higher levels. They emphasized that inventories can help fill the gap in the short term, but prolonged disruptions will necessitate further demand destruction, leading to even higher prices.

The ongoing geopolitical tensions and supply disruptions underscore the fragility of global energy markets and the potential for significant economic impacts if the situation persists.