Goldman Sachs believes the upside risk for oil prices is significant and extreme scenarios could push prices above $120.

Jinse Finance reports that on July 27, Brent crude oil futures have recently resumed their upward trend, with the main contract once approaching the 100-dollar mark and a single-week increase of more than 12%. In terms of news, the risk of Red Sea shipping fermented again in late July, as Houthi forces continuously attacked passing oil tankers. Combined with production cuts by Middle Eastern oil-producing countries, these factors quickly pushed up international oil prices. In response, international investment bank Goldman Sachs has released several in-depth commodity reports analyzing the geopolitical premium. Goldman Sachs believes the upside risks for oil prices are significantly greater than the downside, and that summer inventory drawdown will support high prices in the short term. Goldman Sachs analyzed three scenarios for oil price expectations: First is the base neutral scenario. Assuming that the geopolitical situation in the Middle East eases, shipping gradually resumes, and the Q4 2026 target of “Brent crude at 80 dollars, WTI crude at 76 dollars” is maintained; in 2027, assuming the Strait of Hormuz is navigable, the annual average “Brent crude at 75 dollars, WTI crude at 70 dollars.” The institution estimates a global crude oil supply surplus of 3.2 million barrels/day in 2027, with long-term surpluses suppressing the price center.Second is the extreme upside scenario. If shipping through the Strait of Hormuz is disrupted until 2027 and Gulf crude oil capacity cannot be fully restored until the end of 2027, then in Q4 2026 “Brent crude is likely to exceed 120 dollars, and the 2027 average would remain above 100 dollars”; if the Bab-el-Mandeb Strait and Suez Canal are also simultaneously blocked for a long period, oil prices would increase an additional 25 dollars per barrel.Third is the downside floor scenario. If global supply exceeds expectations and energy demand continues to shrink, Brent crude could fall as low as 60 dollars by the end of 2027, but the probability of this scenario is relatively low.