Summary

Goldman Sachs has revised its oil price outlook downwards, citing an interim deal between the U.S. and Iran that could reopen the Strait of Hormuz. This development accelerates the bank's projection for a recovery in Persian Gulf crude trade, leading to revised price targets for Brent crude in late 2026 and 2027.

Article Details

Goldman Sachs has significantly cut its oil price forecasts following President Donald Trump's interim deal with Iran, which is expected to lead to the reopening of the Strait of Hormuz. This development has prompted the bank to bring forward its timeline for a recovery in Persian Gulf crude trade by one month.

The Wall Street firm now anticipates Brent crude to average $80 per barrel in the fourth quarter of 2026, a decrease from its previous forecast of $90. The 2027 Brent forecast has also been trimmed to $75 from $80. Concurrently, Goldman lowered its U.S. West Texas Intermediate (WTI) estimates to $75 for the fourth quarter of 2026 and $70 for 2027.

The agreement between Trump and Iran's lead negotiator, signed on Monday, extends a ceasefire for 60 days and aims to reopen the vital Strait of Hormuz. This has bolstered hopes for an end to the energy shock that has disrupted global markets and cast a shadow over economic growth prospects. In response to the news, Brent crude prices fell nearly 5% on Monday, reaching their lowest close since March 4.

Goldman's revised timeline anticipates the normalization of Persian Gulf exports to pre-war levels by the end of July, with oil production expected to fully recover by October. The bank estimates that this normalization could be achieved through a 12 million barrels-per-day increase in Hormuz flows from current levels, bringing volumes back to approximately 70% of pre-war levels.

Further supply increases could materialize from Saudi Arabia and the United Arab Emirates ramping up production beyond pre-war levels to replenish depleted commercial stocks held by OECD countries, or from the potential easing of sanctions on Iranian oil. Despite projecting a global supply surplus of 3.2 million barrels per day in 2027, Goldman maintains that Brent prices are likely to hold near their long-term fair value of $75 a barrel. The bank suggests that inventories may not fully rebuild due to significant draws in the first half of the year and ongoing government stockpiling, while a lingering geopolitical risk premium could provide a floor under prices.

However, uncertainties remain. Full details of the memorandum of understanding have not yet been disclosed, with a signing ceremony scheduled for Friday in Geneva, attended by U.S. Vice President JD Vance and Iranian chief negotiator Mohammad Bagher Ghalibaf. Goldman analysts caution that risks to supply recovery persist, including the potential resumption of hostilities, delays in mine-clearing operations for shipping lanes, or Iran's threat to close the Strait again if nuclear talks falter.

In a scenario where the Strait of Hormuz remains disrupted through 2027 and Gulf exports recover only gradually, Goldman estimates that Brent prices could surge above $130 in late 2026 and average $105 for the year. Conversely, a more optimistic outcome, characterized by early normalization, resilient demand, and stronger supply, could see prices average below $70 in Q4 2026 and below $60 in 2027.