• Goldman Sachs (GS) raised its December 2026 Brent crude forecast by $5 to $85 per barrel, citing sustained Middle East shipping disruption and rising Asia-Pacific energy costs.
  • LNG and diesel prices have hit yearly highs, intensifying producer and import cost pressures across Asia, though subsidies and regulated prices are cushioning the initial consumer blow.
  • The revision reflects expectations that regional shipping and supply disruptions will remain material, with the Iran conflict and Strait of Hormuz closure continuing to constrain energy flows.

Goldman Sachs Adjusts Oil Outlook

Goldman Sachs has lifted its December 2026 Brent crude forecast to $85 per barrel, a $5 increase from its previous estimate, as energy markets grapple with persistent supply disruptions in the Middle East. The bank’s updated outlook also implies a WTI forecast of around $80 per barrel, according to people familiar with the matter.

The revision comes amid heightened geopolitical tensions, with the Iran conflict and disruptions to traffic through the Strait of Hormuz—a critical chokepoint for global oil flows—reducing available energy supply to Asia. The region’s heavy reliance on Gulf oil and LNG imports has amplified the impact, pushing product markets like LNG and diesel to new 2026 highs even as crude prices remain below their March peak.

“The shock is moving first into producer prices, import bills, freight and transport costs,” said a commodities strategist at a major bank, who asked not to be identified. “Consumer-price effects are smaller and slower in economies with fuel subsidies or regulated tariffs.”

The Strait of Hormuz normally handles about 20 million barrels per day of crude and petroleum products, but alternative pipelines can reroute only 3.5 to 5.5 million barrels per day—a gap that has left markets vulnerable. The World Bank estimated that the disruption cut global oil supply by 10.1 million barrels per day in March, calling it the largest oil-market disruption in history.

Asia’s Inflation Challenge

The energy shock is rippling through Asia-Pacific economies, where import dependence on Middle Eastern hydrocarbons is especially high. The Asian Development Bank (ADB) forecasts regional growth of 5.0% in 2026, down from 5.5% in 2025, with inflation expected at 4.2% in 2026 and 3.5% in 2027. High and volatile energy prices are a central reason inflation pressure persists, even as subsidies curb direct consumer impact.

Diesel prices are particularly critical, as the fuel powers trucking, construction, farming, shipping, and backup power. Rising diesel costs can feed into food and goods prices more broadly. LNG price increases, meanwhile, raise power-generation costs, especially for energy-importing economies that rely heavily on gas in their electricity mix.

Governments across the region have responded with a mix of fuel and electricity subsidies, regulated retail prices, tax reductions, and targeted assistance for vulnerable households. While these measures reduce immediate hardship, they shift costs to public budgets. The ADB has explicitly characterized broad price-stabilization subsidies as fiscally costly, warning that prolonged use can worsen deficits and discourage energy conservation.

The impact varies by country. India’s projected FY2026 inflation was revised down to 5.0% because tax cuts are expected to limit retail fuel pass-through. In Maldives, fuel and electricity subsidies have also limited the effect. Indonesia, by contrast, has permitted more international-price pass-through to non-subsidized fuels.

Market Sensitivity and Corporate Implications

Goldman’s revised forecast is a central-case scenario, not a ceiling. The bank has flagged a scenario in which Brent exceeds $120 per barrel if average Gulf production in 2027 is roughly 4 million barrels per day below pre-war levels. Wood Mackenzie has projected an even more extreme case in which Brent could approach $200 per barrel by end-2026, with diesel and jet fuel near $300 per barrel in major refining centers—though this is a stress case, not a base forecast.

Other financial institutions have also raised their oil-price forecasts. HSBC (HSBC) reportedly lifted its 2026 Brent forecast to $90 per barrel and its 2027 forecast to $85 per barrel, while Commerzbank (CBK.DE) raised its year-end forecast to $85 per barrel.

The market remains highly sensitive to infrastructure news. In mid-September, Saudi Arabia’s shutdown of a key pipeline bypassing Hormuz pushed Brent to $105.68 per barrel, demonstrating that even alternative routes can be vulnerable and that spare logistical capacity is limited.

Goldman Sachs, a major U.S. financial-services firm, reported 2025 net revenue of $58.28 billion, up 9% year over year, with net earnings of $17.18 billion and diluted EPS of $51.32. The firm’s commodity research and trading franchises make its oil forecasts influential for investors and corporate energy hedgers. Higher energy volatility can raise client demand for hedging, financing, and commodities-market intermediation—businesses where Goldman is active—while also increasing market, credit, and geopolitical risks.

Looking Ahead

The key indicators to watch are actual Hormuz traffic, Gulf production and export volumes, LNG and diesel spreads, government subsidy decisions, and whether higher energy costs begin to lift core inflation and wage growth rather than remaining concentrated in headline prices.

For now, Goldman says the regional core-inflation pass-through remains limited and median core inflation has risen only slightly—an important distinction from a full broad-based inflation spiral. But the ADB’s September 23 outlook raised the region’s 2027 inflation forecast despite lowering the 2026 regional forecast, highlighting the risk that high energy costs become more persistent rather than merely a short-term spike.

Goldman’s inflation projections are reportedly above consensus for India and Malaysia, but below consensus for Japan, Vietnam, and the Philippines. The World Bank’s May 2026 baseline assumes Brent averaging $86 per barrel in 2026 and $70 per barrel in 2027, assuming the acute disruption recedes and Middle East exports recover by the final quarter of the year. In a more persistent-disruption scenario, it put average 2026 Brent in a $95–$115 per barrel range.

A spokesperson for Goldman Sachs declined to comment beyond the published research. The U.S. Treasury and the Asian Development Bank did not immediately respond to requests for comment.

Correction: An earlier version of this article misstated the WTI forecast implied by Goldman’s revision. It is approximately $80 per barrel, not $75.