Goldman Sachs raises Q4 oil price forecast but persists in betting on "supply surplus" for the whole year.

Wall Street financial giant Goldman Sachs unexpectedly raised its forecast for Brent crude oil and West Texas Intermediate (WTI) crude oil for the fourth quarter of 2026 by $6 to $60 and $56 respectively. The core logic behind this is the low crude oil inventory in the OECD (Organization for Economic Cooperation and Development). Nevertheless, the institution continues to assume that Iranian crude oil supply will not be interrupted and maintains its pessimistic outlook for the oil market this year, expecting a surplus in supply and demand. For the full year, Goldman Sachs currently expects the average price of Brent crude oil to be $64 per barrel, higher than the previous forecast of $56; the expected average price of WTI crude oil is $60 per barrel, higher than the previous $52, but still significantly lower than the current latest prices of Brent and WTI crude oil. Oil prices fell by about 1% on Monday, slightly below a six-month high, as the US and Iran prepared for a third round of nuclear talks, easing concerns about escalating geopolitical conflicts. As of the time of writing, the international benchmark crude oil price - Brent crude oil futures price was trading around $71 per barrel, while the US WTI crude oil futures price was reported at $65.75 per barrel. The Iranian Foreign Minister stated that a diplomatic "win-win" solution is within reach and confirmed plans to meet with US envoy Steve Whitecor in Geneva. At the same time, there are reports that any US military strikes against Iran will only be limited to selected military or government sites, reducing the risk of a widespread disruption of crude oil supply. In a commodity market research report dated Sunday, Wall Street financial giant Goldman Sachs stated that in addition to the low demand caused by the OECD inventory, its forecast for Brent crude oil prices of $60 in the fourth quarter of 2026 also reflects two factors: under the assumption of easing geopolitical tensions, the previously estimated $6 risk premium will gradually disappear; and in the event of increasing OECD inventories, a fair value price adjustment of $5 is expected. The institution still maintains its forecast of a surplus of 2.3 million barrels per day (bpd) in the oil market in 2026, assuming no major supply interruptions and that Russia and Ukraine will not achieve peace. The institution stated that its forecast for a supply surplus in 2026 reflects downward adjustments of 200,000 bpd for both supply and demand, offsetting each other in the backdrop of weakening economic growth in Asia. Goldman Sachs' analyst team expects OPEC+ to gradually increase production starting in the second quarter of 2026, as the OECD inventory has not yet accumulated significantly. However, Goldman Sachs expects significant downside risks of $5 and $8 for Brent and WTI crude oil prices respectively in the fourth quarter of 2026, if potential easing of sanctions against Iran or Russia accelerates the accumulation of onshore inventories and leads to longer-term releases of higher supplies. The institution forecasts the average prices of Brent and WTI in 2027 to be $65 and $61 respectively, and under the support of robust demand and continued slowing supply growth, the basic expectations rise to $70 and $66 by December 2027. Under the "benchmark scenario (no major geopolitical supply disruptions)", Wall Street financial institutions are more inclined to a negative assessment of the oil supply and demand market in 2026, leaning towards a "supply surplus/inventory accumulation" view. For example, while Goldman Sachs has raised its oil price forecasts, it still maintains its projection of a surplus of approximately 2.3 million bpd in 2026 (assuming no supply disruption due to conflicts in Iran), and some institutions' monthly surveys of Wall Street analysts indicate that respondents generally expect the global oil market to be in a surplus range of about 500,000-350,000 bpd in 2026. The IEA (International Energy Agency) hinted in its latest monthly report that there could be a significant surplus in early 2026 (especially in the first quarter), with a forecast of supply significantly higher than demand in the first quarter; and the short-term outlook from the US EIA also predicts that global inventories will continue to increase in 2026.