Goldman Lifts December Brent Call to $105 on Mounting Supply Risk

Goldman Lifts December Brent Call to $105 on Mounting Supply Risk

December Brent raised 17% to $105

Goldman Sachs raised its December Brent forecast to $105 a barrel from $90, an increase of nearly 17%, and lifted its 2027 average Brent outlook by 10% to $88. The bank also raised its December WTI forecast to $94 and its 2027 WTI average to $78, from $73 previously.

Struyven team authors the call as peers follow

The note came from analysts including Daan Struyven and Yulia Zhestkova Grigsby. Goldman is not alone: Morgan Stanley raised its fourth-quarter Dated Brent forecast to $105, ANZ lifted its year-end Brent futures expectation to the same level, and UBS sees $110 by year-end.

Substantial disruption risk is the stated reason

Goldman cited elevated and substantial risks to global supplies after months of war in the Middle East, alongside the Russia-Ukraine conflict and broader geopolitical fragmentation. Because the timing and location of disruptions are nearly impossible to predict, its 2027 base case now embeds a 1-million-barrel-per-day global supply disruption allowance.

A $27 premium prices a 5-million-barrel shortfall

The bank estimates about $27 a barrel of the current price is risk premium, consistent with the market pricing a 5-million-barrel-a-day drop in Middle East output lasting six months. Strength in December 2027 and December 2028 Brent futures points to fears of persistently weak regional exports.

Spot prices fall even as forecasts rise

On the day of the call, spot markets moved the other way on hopes of US-Iran de-escalation. January Brent futures slid 4.2% to $108.68 a barrel, December WTI fell 4.3% to $99.61, and oil-linked ETFs slipped as crude dropped more than 3%.

Bull case $140, bear case in the $60s

Goldman's upside case puts Brent at an average of around $130 a barrel in 2027, reaching as high as $140 if Gulf output stays significantly below its 2025 average. The downside case sees Brent sliding into the $60s on a faster recovery in Middle East output and a faster erosion of the risk premium.

Near-record-low inventories add support

Beyond geopolitics, global inventories sit near record lows, sustaining physical restocking and financial hedging demand. The strategists wrote that downside risks to supply, low stocks, and oil's leverage over interest rates are keeping buying firm.

What to watch: Gulf output, shipping, diplomacy

Three variables decide which scenario wins: the pace of Gulf production recovery, damage to infrastructure and shipping attacks, and whether US-Iran diplomacy produces a sustained easing. Goldman had already lifted its December Brent call from $85 to $90 in October, so two upgrades in a month signal a fast-moving risk assessment.

Consumers, airlines and shippers face the impact

If elevated prices stick, gasoline buyers, airlines, shippers, and chemical producers absorb the first hit. Importing economies face renewed inflation pressure that could complicate rate cuts, while producers bank higher revenues. For investors, bigger crude swings mean wider moves in energy shares and oil ETFs.