- Goldman turned more bullish on crude. Goldman Sachs now sees Brent at $105 a barrel in December, up from a previous estimate of $90, and averaging $88 next year, 10% more than it forecast before, analysts including Daan Struyven and Yulia Zhestkova Grigsby wrote in a Nov. 1 note that also raised forecasts for West Texas Intermediate.
- The midterms are a key risk. “Substantial downside supply risks are likely to sustain a large, near-term risk premium,” the analysts wrote, adding that markets are assigning “increasing weight to escalation after the Nov. 3 US midterms and subsequent potential weakness in Mideast supply.”
- The scenarios are wide. Goldman’s base case now includes a 1-million-barrel-per-day global supply disruption allowance in 2027; in its upside scenario Brent averages $130 next year if Persian Gulf output stays 3.5 million barrels a day below last year’s average, while a faster recovery could push futures “into the $60s.”
- Other banks are moving the same way. Morgan Stanley recently raised its fourth-quarter forecast for Dated Brent to $105 a barrel, and ANZ lifted its year-end outlook for Brent futures to the same level.
What Happened?
Brent rallied 14% in October to a six-month high, even as crude supplies from the Middle East rebounded close to pre-war levels, on concern that hostilities between the US and Iran may flare up again after the midterms. President Donald Trump has repeatedly hinted that he may resume airstrikes, and Iran’s supreme leader has ordered top commanders to prepare for renewed confrontation. Goldman also cited intensified shipping attacks, infrastructure damage and risks from Russia’s invasion of Ukraine.
Why It Matters?
The forecast lands as crude is pulling back. Brent fell 3.1% to $109.96 early Monday, according to the Financial Times, as Citi’s Anthony Yuen pointed to visits by Qatar and Saudi Arabia to Tehran: “The negotiations as well as some profit-taking are bringing prices down.” Goldman’s call suggests Wall Street still sees a large risk premium staying in oil, which matters for inflation, the Fed’s rate path and energy stocks.
What’s Next?
The immediate test is the period after Tuesday’s vote, when markets fear an escalation. Watch whether diplomatic talks with Iran gain traction or break down, shipping and refinery attacks in the region, and whether other banks follow Goldman, Morgan Stanley and ANZ in raising forecasts. “With the timing and location of disruptions nearly impossible to predict,” Goldman said, its base case now bakes in a standing supply disruption.
Affected Tickers and Coins: GS, USO, BNO, XLE, MS
Source: Bloomberg, Financial Times
