Goldman Sachs Raises Oil Price Outlook as Supply Shock Deepens Global Market Risks

BY COMFORT OGBONNA

Goldman Sachs has lifted its oil price forecasts for the fourth quarter, projecting Brent crude to average $90 per barrel and U.S. West Texas Intermediate (WTI) to reach $83 per barrel. The revised outlook reflects a sharper-than-expected drop in oil output from the Middle East, as geopolitical tensions and supply disruptions continue to reshape global energy dynamics.

In a note dated April 26, analysts led by Daan Struyven warned that the broader economic risks tied to the current oil market shock extend well beyond crude pricing alone. They pointed to a combination of rising oil prices, unusually high refined product costs, and the growing threat of supply shortages as factors that could amplify pressure on the global economy. According to the analysts, the scale of the current disruption is unprecedented in recent history, making the outlook particularly uncertain.

A key assumption behind Goldman Sachs’ updated forecast is a slower recovery in oil flows from the Gulf region. The bank now expects exports through the strategically vital Strait of Hormuz to normalize by the end of June, later than its previous mid-May estimate. This delay suggests that supply constraints could persist longer than initially anticipated, prolonging upward pressure on prices.

The firm estimates that Middle East crude production losses have reached approximately 14.5 million barrels per day, a massive disruption that is rapidly depleting global oil inventories. As a result, stockpiles are being drawn down at a record pace of between 11 million and 12 million barrels per day in April alone. Such a steep decline in inventories highlights the severity of the supply imbalance currently affecting the market.

Looking ahead, Goldman Sachs expects a dramatic shift in the global oil balance. What was previously forecast as a surplus of 1.8 million barrels per day in 2025 is now projected to swing into a deficit of 9.6 million barrels per day by the second quarter of 2026. This sharp reversal underscores how quickly market conditions have deteriorated under the weight of ongoing supply disruptions.

At the same time, higher energy prices are beginning to weigh on demand. The bank anticipates that global oil consumption will decline by 1.7 million barrels per day in the second quarter, with a more modest year-on-year drop of 100,000 barrels per day expected in 2026. The primary driver behind this decline is the surge in refined product prices, which is likely to curb consumption across both developed and emerging markets.

Analysts cautioned that the current pace of inventory drawdowns is unsustainable over the long term. If supply disruptions persist, the market may require even steeper reductions in demand to restore balance. This scenario raises the risk of broader economic slowdowns, as high energy costs ripple through industries and consumer spending.

Overall, Goldman Sachs’ revised outlook paints a picture of an increasingly strained oil market, where supply constraints, geopolitical uncertainty, and weakening demand are converging. With no immediate resolution in sight, both prices and economic risks are expected to remain elevated in the months ahead.