Goldman Sachs Warns of Potential Brent Crude Surge to $140 by Early 2027 Amid Gulf Supply Disruptions
Commodity prices are expected to remain volatile through 2027, driven by geopolitical conflicts, supply disruptions, and extreme weather risks, according to a report from Goldman Sachs. The bank highlights significant upside risks for crude oil, European natural gas, and agricultural commodities. Escalating tensions in the Middle East, particularly in the Strait of Hormuz, along with potential colder winters in Europe, could lead to sharp increases in energy prices.
Goldman Sachs projects that a recovery in Middle Eastern oil supplies and a reduction in risk premiums may lower Brent crude and European natural gas prices to $90 per barrel and €70 per megawatt-hour, respectively, by the end of 2026. However, the bank warns that a prolonged disruption in Gulf oil supplies could push Brent prices to $140 per barrel in early 2027, averaging around $125 per barrel throughout that year. European natural gas prices could also rise to €150 per megawatt-hour by late 2026 if liquefied natural gas exports from the Persian Gulf remain low and winter temperatures are significantly colder than average.
Middle East tensions keep oil supply risks in focus
Oil prices rose on Wednesday amid escalating tensions in the Middle East, raising concerns over supply disruptions. Brent crude futures increased by $1.61, or 1.5%, to $110.40 per barrel, while US West Texas Intermediate (WTI) crude gained $1.45, also 1.5%, to $99.27 per barrel. These gains followed a decline after Iranian President Masoud Pezeshkian discussed mediation efforts with Pakistan’s army chief in Tehran, although uncertainty over a diplomatic breakthrough continued to affect market sentiment.
Suvro Sarkar, head of energy research at DBS, noted that oil prices have experienced significant fluctuations recently. He attributed these changes to profit-taking, hopes for a brokered deal, and ongoing drawdowns in US crude and petroleum product inventories. Maritime security risks have intensified, with ship-tracking firm Kpler reporting at least 18 vessel attacks in the past two weeks. Analysts from LSEG warned that these attacks have extended beyond the Strait of Hormuz into the Gulf of Oman, threatening regional oil loadings and ship-to-ship transfers.
Agricultural markets face weather and supply pressures
Goldman Sachs also indicated that agricultural commodities are under increasing pressure due to geopolitical conflicts, potential food export restrictions, and the likelihood of a severe El Niño weather pattern. The agriculture component of the Bloomberg Commodity Index has risen 19% year-on-year. Disruptions to fertilizer shipments through the Strait of Hormuz and grain exports from the Black Sea could further tighten supplies and increase costs.
The bank noted a greater than 81% probability that a strengthening El Niño could reach “super” El Niño conditions, which may disrupt crop production through droughts and floods in key agricultural regions. This outlook coincides with broader concerns regarding the impact of geopolitical disruptions on global supply chains. In the United States, two Energy Department officials reported efforts to work with refiners worldwide to boost fuel production amid a diesel shortage that has driven prices higher.
Copper and gold seen gaining in 2027
Goldman Sachs anticipates that industrial and precious metals will benefit from long-term demand and supply trends. The bank forecasts that copper prices will average $15,400 per tonne in 2027, driven by demand from electrification, data centers, and artificial intelligence, alongside constrained mine supply. Gold prices are expected to reach $5,400 per ounce by the end of 2027, supported by central bank purchases and diversification strategies.
The Bloomberg Commodity Index has generated a total return of 36% year-to-date, outperforming equities and bonds. The bank’s outlook suggests that while prices could moderate if Middle Eastern supplies recover, prolonged energy disruptions, adverse weather, and tighter agricultural supplies could sustain upward pressure through 2027.
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