Goldman Sachs says oil prices high as escalation threatens supply
Dated Brent crude for delivery next month trades above $130 per barrel while benchmark Brent futures hold above $100. Goldman Sachs reported that physical oil prices remain elevated because escalation threatens supply while near-record-low global inventories fuel strong restocking demand.
Supply Risk Premiums and Portfolio Hedging Drive Elevated Costs
Physical prices stay high because escalation threatens key infrastructure like ports, pipelines, and oil fields in Iran and regions overseen by the Houthis. Struyven calculates that spot prices for Brent crude carry a risk premium of nearly $25 per barrel on top of fair value. This premium reflects fears that supply could face sudden curtailment and inventories might shrink further if regional conflicts worsen. At the same time, the sensitivity of global stocks and bonds to oil prices has generated steady demand for oil as a portfolio hedge, keeping prices elevated.
The global oil market has tightened significantly over recent quarters. In September 2026, demand exceeded supply by just 0.3 mb/d. This marks a sharp narrowing from the 7.2 mb/d supply deficit recorded in March. Higher non-Gulf oil production alongside falling global demand helped balance the market after a surplus period throughout 2025.
Demand Contraction and the Expected Shift to a Global Surplus
Higher oil prices have directly curbed consumption. Global demand for oil fell by roughly 1.3 mb/d in September 2026 compared to the 2025 average.
Looking ahead, Goldman Sachs researchers project that the global market balance for crude oil and liquid fuels will shift into a surplus during the fourth quarter of 2026 and persist through 2027. Struyven identifies this anticipated supply-demand shift as the primary catalyst for expected moderation in crude prices. Non-Gulf production gains combined with reduced consumption are set to offset remaining deficits from the Persian Gulf.