Oil Prices Poised to Climb Amid Mideast Output Cuts

Goldman Sachs raised its oil price forecasts on April 27, pointing to reduced output from the Middle East and a slower-than-expected recovery in Gulf production. The bank said it now expects Brent crude to reach $90 per barrel and U.S. West Texas Intermediate (WTI) to reach $83 per barrel in the fourth quarter.

The revision is tied to expectations for lower Gulf exports moving through the Strait of Hormuz. Goldman Sachs said it now assumes a return to more normal flows by the end of June, later than its previous estimate of mid-May, and it also cited a slower rebound in Gulf output as part of the same supply picture.

Analysts at the firm estimated that Middle East crude production losses total 14.5 million barrels per day (bpd). They said those losses are driving a rapid drawdown in global oil inventories, with inventories falling at what they described as a record pace of 11-12 million bpd in April.

On that basis, Goldman Sachs said it expects a major swing in the global oil balance over time. The firm’s figures show the market moving from a 1.8 million bpd surplus in 2025 to a 9.6 million bpd deficit in the second quarter of 2026, reflecting the combined effects of supply disruption and evolving demand conditions.

Goldman Sachs also lowered its demand outlook, attributing the change to higher refined product prices. It projected global oil demand would fall by 1.7 million bpd in the second quarter and by 100,000 bpd in 2026 as consumers and businesses respond to increased costs for refined fuels.

The firm warned that if the supply shock lasts longer, demand may need to weaken more sharply because inventory declines at the pace described are not sustainable. It also said the economic risks tied to these price dynamics are significant, and highlighted that unusually high refined product prices and the possibility of product shortages could add to those risks.