Major banks raise oil forecasts as Gulf disruptions persist

A wave of upward revisions to oil price forecasts swept through Wall Street and European banks this week as the conflict between the United States and Iran, compounded by Houthi advances in Yemen, continued to choke two of the world's most critical shipping corridors.

Goldman Sachs ↘ 0.36% raised its Brent and West Texas Intermediate crude price forecasts by $5 per barrel for December 2026 and 2027, setting Brent at $85 and WTI at $80 for year-end, citing an expectation that Middle Eastern shipping disruptions will persist into next year, according to Reuters. The bank warned that Brent could climb above $120 if average Gulf oil output in 2027 remains 4 million barrels per day below pre-war levels. Bank of America ↘ 0.68% raised its Brent forecast to $83 per barrel for the second half of this year, cautioning that "more disruptions could push it toward $120/bbl, while vast energy infra damage could drive prices to $150/bbl". Commerzbank lifted its year-end Brent forecast to $85 from $75, and HSBC ↘ 1.14% raised its 2026 and 2027 Brent projections to $90 and $85, respectively, saying the market is "adjusting to a disrupted 'new normal'".boereport+2

Supply Outlook Darkens

The forecast revisions came as S&P Global ↘ 0.98% projected that Middle Eastern crude supply could fall by nearly half through 2027, averaging 10 to 16 million barrels per day compared with roughly 20 million before the war began in early 2026. Jim Burkhard, the firm's vice president and global head of crude oil research, said the "market is not returning to calm, it is adjusting to the new normal defined by unresolved conflict and persistent maritime risk". The International Energy Agency said Friday that world oil supply is projected to average 100.7 million barrels per day in 2026, down 5.7 million year over year, with a full recovery from Middle East producers deferred until 2027.newindianexpress+1

Shipping Costs Compound the Pressure

RBC Capital Markets Royal Bank of Canada ↘ 1.28% analyst Helima Croft warned that prices could top $120 by year-end if Houthi advances continue to imperil traffic through the Bab el-Mandeb strait. Houthi forces seized the port city of Mokha on September 3, and vessel counts through Bab el-Mandeb fell to just six on September 10. Supertanker freight rates from the Gulf of Oman to China have surged to roughly 4.5 times the standard benchmark, adding approximately $11.50 per barrel in shipping costs. Only seven ships transited the Strait of Hormuz on Thursday, down from a pre-war average of about 125 per day.oilprice+1

The Wall Street Journal News Corp ↘ 0.03% reported that White House advisers have told President Trump the conflict could extend through the remainder of his term in January 2029 — a timeline that, if realized, would keep energy markets under strain for years.finance.biggo