Key insights
- Goldman Sachs revised its forecast for Gulf oil export normalization to late August from late June, citing a smaller-than-expected supply deficit due to demand destruction and pre-war oversupply. Despite this delay, the bank maintains its $90/barrel Brent crude forecast for late 2026 but lowers the 2027 forecast to $80 due to higher supply and weaker demand, particularly noting China's accelerating shift to EVs. The analysis suggests that while oil market disruptions persist, the immediate impact on US equities is neutral as the market has priced
Investing.com -- Goldman Sachs has pushed back its timeline for a recovery in Gulf oil exports, now expecting flows to normalize by late August rather than late June, while keeping its fourth-quarter 2026 Brent crude price forecast unchanged at $90 per barrel. The delay is offset by a smaller-than-expected supply deficit during the Strait of Hormuz disruption, the bank said.
Goldman estimates a 5-6 million barrels per day (mb/d) deficit in the second quarter of 2026, well below the 14-15 mb/d hit to Middle East liquids production, as nearly 5 mb/d of demand destruction and over 4 mb/d of pre-war oversupply cushioned the impact.
Spot Brent futures have fallen around 25% from their late March peak despite still-low flows through Hormuz, driven by a smaller physical market deficit and a moderation in investor positioning as fears of major escalation have eased since a ceasefire announcement.
Goldman said full normalization in Gulf exports to their pre-war level of 23 mb/d could be achieved with Hormuz flows recovering to just 70% of pre-war levels, given existing redirections through Yanbu, Fujairah, the Gulf of Oman, and Ceyhan.
“We still see the availability of pipeline capacity to destock previously produced oil as the key constraint on reopening,” economists led by Daan Struyven said in a note, while labor and materials availability are unlikely to be limiting factors, with drilling activity continuing across the region.
For 2027, Goldman lowered its average Brent forecast by $5 to $80, citing higher supply and weaker demand. The bank lifted production estimates for the UAE — following its exit from OPEC — as well as for Brazil, Guyana, and Venezuela.
Demand-wise, Goldman expects most of the current weakness to reverse after reopening but assumes "just over 10% of the demand weakness persists as China’s shift to alternatives accelerates," pointing to China’s EV share in passenger car sales jumping from 50% in February to 62% in May.
Despite projecting a 3.5 mb/d surplus in 2027, the economists see prices holding relatively firm, as OECD commercial stocks are unlikely to reach high levels following sharp 2026 draws, and a security premium tied to disruption risk is expected to put a floor under prices.
In an adverse scenario, the bank sees Brent averaging just over $110 in the fourth quarter if exports only normalize by end-October, and $140 in 2027 in a severely adverse scenario where Hormuz remains mostly closed through year-end.
On the other hand, the bank’s benign scenario sees Brent averaging around $70 in Q4 and $60 in 2027 if exports normalize by end-July, demand losses prove stickier, and supply comes in stronger than expected.
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