Goldman Sachs has revised its Brent crude oil price forecasts downward, anticipating an easing of global oil prices in the coming quarters. This adjustment follows an interim agreement aimed at reopening the strategically vital Strait of Hormuz, which is expected to accelerate the recovery of Persian Gulf oil exports.
Hormuz Reopening Drives New Outlook
In a note released on June 15, the Wall Street bank cut its Brent crude forecast for the fourth quarter of 2026 to $80 a barrel, a significant reduction from its previous estimate of $90. The average Brent price forecast for 2027 was also lowered to $75 a barrel. Similar revisions were made for West Texas Intermediate (WTI) crude, with forecasts set at $75 per barrel for Q4 2026 and an average of $70 for 2027.
These adjustments come after US President Donald Trump announced an interim agreement to restore normal oil flows through the Strait of Hormuz. This critical shipping route, handling approximately one-fifth of global oil trade, is a key energy chokepoint where disruptions can trigger sharp price spikes and supply shortages.
Goldman Sachs now projects that oil exports from Persian Gulf producers will return to pre-conflict levels by the end of July, a month earlier than previously assumed, with overall production expected to normalize by October.
Geopolitical Risks Persist
Despite the more optimistic short-term outlook, Goldman Sachs cautioned that the risks to oil prices remain two-sided. The bank warned that renewed hostilities, attacks on vessels, or delays in clearing mines within the Strait of Hormuz could still disrupt exports, potentially pushing Brent crude above $130 a barrel in an extreme scenario where disruptions persist through 2027.
Conversely, stronger-than-expected output increases from major producers like Saudi Arabia and the UAE, coupled with potential sanctions relief for Iran, could add further supply to the market. In a downside scenario, this could see Brent average just below $60 a barrel in 2027.
Implications for Global Oil Demand and India
Even with a projected global oil surplus of 3.2 million barrels per day in 2027, Goldman Sachs expects prices to maintain relative resilience. This is attributed to strategic stockpiling by governments and sustained low commercial inventories, which are likely to prevent a sharp build-up in global crude stocks.
For major oil importers such as India, lower oil prices would offer substantial relief. India imports more than 88% of its crude oil, making global prices a crucial variable for its economy. According to ICRA, every $10-per-barrel increase in average crude prices can raise India's net oil import bill by $13-14 billion and widen its current account deficit by around 0.3% of GDP. A sustained decline in crude prices would therefore help alleviate inflationary pressures and support economic growth.
The possibility of increased Iranian oil exports is also being closely monitored. Manish Vaid, Junior Fellow at the Observer Research Foundation, noted that any increase in Iranian shipments could help moderate global prices and benefit India's import bill. He emphasized, however, that the extent of this benefit would depend on the agreement's implementation and how sanctions-related uncertainties are addressed. Before sanctions were tightened in 2018, Iran accounted for a significant portion of India's crude imports, and additional Iranian barrels could intensify competition among exporters, potentially securing better pricing for Asian buyers.