Goldman Sachs raises oil price forecasts on tight supply

[SINGAPORE] Goldman Sachs has raised its oil price forecasts for the fourth quarter to US$90 a barrel for Brent crude and US$83 for US West Texas Intermediate (WTI), on lower output from the Middle East.

“The economic risks are larger than our crude base case alone suggests because of the net upside risks to oil prices, unusually high refined product prices, products shortages risks, and the unprecedented scale of the shock,” GS analysts led by Daan Struyven said in an April 26 note.

Its forecast assumes a normalisation in Gulf exports through the Strait of Hormuz by end-June versus mid-May previously and a slower Gulf production recovery.

Goldman Sachs estimated 14.5 million barrels per day of Middle East crude production losses are driving global oil inventories to draw at a record 11-12 million bpd pace in April.

It expects the global oil market to swing from a 1.8 million bpd 2025 surplus to a 9.6 million bpd Q2 2026 deficit.

Global oil demand is expected to fall 1.7 million bpd in Q2, 100,000 bpd in 2026 on year given jump in refined product prices.

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“Because extreme inventory draws are not sustainable, even sharper demand losses could be required if the supply shock persists longer,” the analysts said. REUTERS