Oil Prices May Ease to $80 per Barrel by 2027 as Middle East Supply Recovers
Goldman Sachs predicts oil prices will ease to $80 by 2027 as Middle East supply recovers, though geopolitical tensions remain a risk.
Global crude oil prices are expected to moderate to USD 80 per barrel by 2027, driven by a recovery in Middle East supplies and a shift toward a market surplus. This projection comes from Goldman Sachs Research, though the firm warns that any renewed escalation in the conflict involving the US, Israel, and Iran could keep prices higher for longer than currently anticipated.
The Price Trajectory: 2026 and Beyond
According to Daan Struyven, the co-head of global commodities research and head of oil research at Goldman Sachs, the benchmark Brent crude is now expected to trade at USD 90 per barrel in December 2026. This is a revision upward from the previous forecast of USD 85. However, the long-term outlook suggests a decline, with prices averaging USD 80 per barrel in 2027.
The bank predicts that the global oil market will transition into a surplus starting in the fourth quarter of 2026 and will remain in that state throughout 2027, which provides the fundamental support for lower prices.
Closing the Supply Gap
The global supply deficit has narrowed significantly due to several key factors:
- Middle East Recovery: Oil exports from the Persian Gulf have recovered to levels near their 2025 average as of late September. This is attributed to exporters expanding transportation capacity and adapting to ongoing conflicts.
- Non-Gulf Production: Higher production levels outside the Persian Gulf have further eased the pressure on supply.
- Market Balance: By September, the market was nearly balanced, with demand exceeding supply by only 0.3 million barrels per day (mb/d). This is a sharp contrast to March, when the deficit stood at a massive 7.2 mb/d.
The 'Risk Premium' and Current Volatility
Despite the long-term optimistic outlook, current prices remain volatile. Physical Brent crude for near-term delivery has surged past USD 130 per barrel, while benchmark Brent futures have recently traded above USD 100.
Struyven notes that physical prices are staying elevated because the threat of escalation continues to jeopardize supply, while global inventories—which are at near-record lows—are driving a strong demand for restocking.
"Physical prices remain elevated because escalation threatens supply while near-record-low global inventories fuel strong restocking demand," Struyven stated.
The report estimates that current crude prices include a risk premium of nearly USD 25 per barrel. This premium accounts for the possibility of further supply disruptions and the potential for additional inventory drawdowns if geopolitical tensions intensify.
Demand Slump and the EV Shift
On the consumption side, global oil demand saw a decline of 3.3 mb/d year-on-year in the third quarter of 2026. This weakness was most prominent in developed Asian economies, the Middle East, and particularly China.
While Goldman Sachs expects a gradual recovery in demand as refined oil products become more affordable and available, they foresee a permanent shift in the trajectory. By the fourth quarter of 2027, global oil demand is expected to remain 0.7 mb/d below what it would have been without conflict-related shocks. This is partly due to:
- The accelerated adoption of electric vehicles (EVs).
- Changing fuel consumption patterns within China.
Ultimately, the bank emphasizes that the future of oil pricing will hinge on three critical variables: the speed of supply recovery, the normalization of demand, and the risk of renewed conflict in the Middle East region.