Surging maritime transit fees and ongoing international hostilities are forcing several investment banks to raise their medium-term crude oil price benchmarks. UBS now projects Brent crude will trade at $110 per barrel by the end of 2026, while Goldman Sachs has lifted its December forecast to $105 per barrel. These revisions signal that investment banks are pricing in longer-lasting physical supply vulnerabilities and elevated logistical expenditures across key transport corridors.
A primary catalyst behind the revised pricing environment is an unprecedented surge in ocean shipping expenses. Very Large Crude Carrier spot rates for Middle East-to-China routes have jumped to between $30 and $40 per barrel, representing a dramatic leap from historical ten-year averages of $1 to $3 per barrel.
This freight rate inflation stems from longer navigational routes and constrained tanker availability, following a record frequency of vessel attacks near the Strait of Hormuz in October that drastically increased maritime insurance costs. UBS noted that market uncertainty remains heightened due to unpredictable regional hostilities, global oil demand trends, and the pace of Gulf output recovery.
In response to sustained risks across the Middle East and Russia-Ukraine conflicts, Goldman Sachs reconfigured its pricing framework to incorporate a mandatory 1 million barrel-per-day global supply disruption buffer for 2027. Consequently, Goldman raised its 2027 full-year Brent average forecast from $80 to $88 per barrel and pushed its 2027 West Texas Intermediate (WTI) projection from $73 to $78 per barrel, alongside a December WTI target of $94 per barrel. The bank highlighted that market participants are maintaining higher risk premiums because a lasting diplomatic breakthrough appears unlikely.
These upgrades mark a distinct shift from Goldman’s stance in mid-October, when the institution projected December Brent at $90 per barrel and a 2027 average of $80 per barrel. At that time, Goldman argued that supply adaptations in the Middle East would eventually weigh on prices despite a spot risk premium near $25 per barrel, while noting that third-quarter global oil demand had contracted by 3.3 million barrels per day year-over-year.
Looking ahead across 2027, UBS expects Brent crude to moderate gradually from $95 per barrel in March to $90 in June and $85 in September, establishing a downward trajectory even as geopolitical disruption allowances remain embedded in base-case forecasts.
