Goldman Sachs said in a commodities report published on July 27 that it has outlined three oil-price scenarios ranging from a neutral baseline to an extreme upside case. The bank’s central conclusion was that upside risks outweigh downside room, while summer inventory draws should keep prices elevated in the near term.
Oil surged more than 12% in a week before reversing
The report said front-month Brent crude at one point approached $100 a barrel over the past week, with gains exceeding 12% for the week. Goldman linked the move to three factors: renewed shipping risks in the Red Sea after Houthi attacks on passing oil tankers, production cuts delivered by Middle Eastern oil producers, and a wave of in-depth commodities reports from investment banks including Goldman that broke down geopolitical risk premiums.
The rally was not steady. At the July 27 open, after the U.S. paused airstrikes on Iran over the weekend, Brent briefly fell 6% to around $91 a barrel, while WTI dropped below $84, showing how quickly traders reacted to signs of a ceasefire.
Base case: Brent at $80 in the fourth quarter of 2026
Goldman kept its core forecast unchanged. Assuming geopolitical tensions in the Middle East ease and shipping gradually recovers, the bank sees Brent crude at $80 a barrel and WTI at $76 in the fourth quarter of 2026.
Looking to 2027, and assuming normal transit through the Strait of Hormuz, Goldman forecasts an average Brent price of $75 for the year and an average WTI price of $70. The report said the bank estimates a global crude oversupply of 3.2 million barrels per day in 2027, with persistent excess supply likely to cap the longer-term price center.
Extreme upside case: Brent could break above $120 if Strait of Hormuz disruption lasts
This was the focal point of the report. Goldman laid out two bullish cases.
- Core upside case: If shipping disruption in the Strait of Hormuz lasts through 2027 and Gulf crude production capacity is not fully restored until the end of 2027, Brent could rise above $120 in the fourth quarter of 2026, while its 2027 annual average could move above $100.
- Layered disruption case: If the Bab el-Mandeb Strait and the Suez Canal are also blocked for an extended period, oil prices could rise another $25 a barrel on top of the core upside case. That would imply Brent near an extreme level of $145.
Goldman analysts said the revised assumption behind the scenario is that crude volumes moving through the Strait of Hormuz would fall to 5% of normal capacity for as long as six weeks, with another month needed for recovery.
Downside floor: Brent could revisit $60 by late 2027
Goldman also presented a downside protection case. If global supply expands more than expected and energy demand continues to shrink, Brent could fall as low as $60 by the end of 2027. The report said the probability of that scenario is low.
New emphasis: a structural risk premium
Beyond the three scenarios, Goldman said a structural change is taking shape in the oil market: global crude production capacity and spare capacity are increasingly concentrated in a small number of countries. The bank said that concentration could lift risk premiums over a longer period, and analysts added that it may encourage governments to increase strategic reserves.
The report also noted that Taiwan relies on imports for more than 95% of its crude oil. By its rough estimate, every $10 increase in the oil price adds about NT$1.5 billion to NT$2 billion in annual spending. If average Brent prices rise from $75 to $100, monthly fuel-related costs for households in Taiwan could increase by NT$500 to NT$1,000.