Goldman cuts near-term oil outlook as risk premium fades but keeps longer-term view.
Summary:
- Goldman cuts Q2 oil forecasts
- Brent/WTI seen at $90/$87 in Q2
- Driven by reduced geopolitical risk premium
- Early signs of Hormuz flows improving
- Front-end oil curve repricing lower
- Back-end forecasts unchanged
- Brent: $82/$80 (Q3/Q4)
- WTI: $77/$75 (Q3/Q4)
- Structural supply-demand still supportive
- Distinction between short-term vs long-term outlook
Goldman Sachs has lowered its near-term oil price forecasts, citing a reduction in geopolitical risk premia and early signs that crude flows through the Strait of Hormuz are beginning to recover.
The bank now expects Brent and WTI to average $90 and $87 per barrel respectively in the second quarter, marking a downgrade from previous projections as front-end pricing adjusts to easing tensions following the U.S.-Iran ceasefire.
Goldman said the shift reflects a compression in the risk premium embedded in oil markets, particularly at the front of the futures curve, where prices had surged on fears of prolonged disruption to Middle Eastern supply. Recent developments, including tentative improvements in shipping flows through the Strait of Hormuz, have helped temper those concerns.
However, the bank maintained a more cautious longer-term outlook, leaving its forecasts for the second half of 2026 unchanged. Goldman continues to see Brent at $82/$80 and WTI at $77/$75 across the third and fourth quarters, suggesting that while near-term risks have eased, the broader supply-demand balance remains intact.
The unchanged back-end forecasts highlight the bank’s view that structural factors—including global demand resilience and constrained supply—continue to support oil prices even as immediate geopolitical tensions show signs of stabilisation.
The update underscores the importance of distinguishing between short-term risk premium dynamics and longer-term fundamentals. While ceasefire optimism has driven a pullback in front-month pricing, uncertainty around the durability of the agreement and the full restoration of flows through Hormuz remains a key variable for markets.
