Goldman, UBS Raise 2026 Oil Forecasts by $10
Goldman Sachs and UBS sharply revised their crude oil price forecasts upward on March 4, citing severe supply disruptions from the escalating Middle East conflict. Goldman raised its second-quarter 2026 forecast for Brent crude by $10 to $76 per barrel, with its WTI projection increasing by $9 to $71. The bank warned its forecasts are tilted to the upside, noting that if depressed shipping volumes through the Strait of Hormuz persist for five more weeks, Brent prices would likely climb to $100 per barrel.
Echoing this sentiment, UBS increased its full-year 2026 average Brent price forecast by $10 to $72 per barrel. The bank projects Brent to average around $80 in March and stated that a prolonged closure of the strait could drive prices past $100. While a de-escalation could remove some risk premium, UBS analysts do not expect prices to return to the $60-per-barrel level seen at the start of the year.
Iraq Cuts Production by Over 1.5M Barrels Per Day
The physical market is already tightening significantly. Iraq has cut its oil production by more than 1.5 million barrels per day as the country's storage capacity fills up with tankers avoiding the region. According to Iraqi oil officials, output from the country's largest field, Rumaila, was reduced by 700,000 barrels a day. The West Qurna 2 and Maysan fields saw their output fall by 450,000 and 350,000 barrels per day, respectively.
These production cuts stem from the near-paralysis of the Strait of Hormuz, a critical chokepoint that handles roughly one-fifth of global oil shipments. Iran has issued warnings to global shipping operators, injecting a significant geopolitical risk premium into oil prices and disrupting a vital artery for crude exports from Saudi Arabia, Iraq, and the United Arab Emirates.
Brent Eases to $80.91 as Economic Data Counters Supply Fears
Despite the clear supply-side pressures, oil prices reversed course after a multi-day advance. On March 4 at 13:57 UTC, Brent futures for May delivery fell 0.6% to $80.91 per barrel, while WTI futures shed 1.1% to $73.77. The move followed a nearly 5% gain on the previous day, which had pushed the Brent contract to its highest price since July 2024.
The price pullback was driven by stronger-than-expected U.S. economic data, which tempered concerns about demand destruction. Private employment in the U.S. grew by 63,000 in February, beating expectations of 50,000 and marking the best reading in approximately a year. This data suggests underlying economic resilience, which could support oil demand even as central banks weigh the inflationary impact of higher energy prices.
