Goldman Sachs: Gas Prices May Have Peaked for 2026

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The national average gas price fell roughly 30 cents, or 6.5%, from its May 21 peak of $4.56 per gallon to approximately $4.26 by mid-June 2026.
Goldman Sachs trimmed its Q2 2026 Brent crude forecast to $90 per barrel from $99, with a Q4 base case of $80 per barrel.
A fragile US-Iran ceasefire is helping restore Strait of Hormuz oil flows, easing the sharpest energy cost spike since the early 2020s.

Goldman Sachs has cut its crude oil forecasts and signals the national average gasoline price—which hit a four-year high of $4.56 on Memorial Day—may have reached its seasonal ceiling as the US-Iran ceasefire unlocks key oil flows.

Lead

Goldman Sachs has reset its crude oil price forecasts sharply lower, pointing to the retreat of the gas price forecast from a four-year high as the primary signal that American pump prices have likely crested for the season. The Goldman Sachs oil desk trimmed its second-quarter 2026 Brent crude target to $90 per barrel from $99, and its West Texas Intermediate forecast to $87 from $91, as the geopolitical risk premium embedded in energy markets began unwinding in late May 2026. The national average for a gallon of regular gasoline, which had surged from $2.81 in January to $4.56 by Memorial Day—a 62% run in under five months—has since pulled back, easing the pressure on household budgets heading into mid-summer.

What Happened

The 2026 spike in energy costs traced directly to the military conflict between the United States, Israel, and Iran, and to Iran's effective closure of the Strait of Hormuz—the maritime chokepoint through which roughly one-fifth of global crude supply transits daily. At the height of the disruption, Goldman Sachs estimated that approximately 14.5 million barrels per day of Middle Eastern crude production had gone offline, triggering the largest acute supply shock in the recorded history of the global crude market. Global inventories were drawing down at a record pace of 11 to 12 million barrels per day through April.

Pump prices responded almost immediately. By Memorial Day weekend, the AAA national average had reached $4.56 per gallon, matching levels last seen four years earlier, and consumer confidence collapsed. The University of Michigan Consumer Sentiment Index fell to an all-time low of 47.6 in April, down from 53.3 in March, with respondents specifically citing surging gas prices and the Iran conflict as the primary drivers of their pessimism.

The Goldman Sachs Oil Forecast Reset

Goldman's revised price structure now reflects two distinct scenarios playing out simultaneously: a base case built around a durable ceasefire and a tail risk anchored to its potential collapse.

Under the base case, Goldman Sachs left its third-quarter 2026 Brent forecast unchanged at $82 per barrel and WTI at $77, then set a fourth-quarter base case of $80 for Brent and $75 for WTI. The bank also quietly lowered its full-year 2027 average Brent forecast by $5 to $80 per barrel, acknowledging that the structural supply overhang—including a projected 2.3 million barrel-per-day global surplus in 2026—will weigh on prices well into next year, with Brent potentially bottoming near $54 per barrel by the fourth quarter if inventories continue building.

Goldman's European natural gas desk moved in parallel, cutting the Q2 TTF price forecast to 50 euros per megawatt-hour from 70, assuming a gradual normalization of LNG flows through the Hormuz corridor by mid-year.

The downside gas price forecast is not without caveats. In a severe scenario where the ceasefire collapses and persistent Middle Eastern production losses reach around 2 million barrels per day, Brent could average $115 per barrel through the fourth quarter—translating to renewed pressure at the pump that would erase the relief consumers have seen in June.

Market Reaction

Crude markets responded swiftly to ceasefire signals, with global oil benchmarks falling approximately 20% from their 2026 highs as investor confidence in a durable Hormuz reopening grew. Gasoline futures dropped roughly 10% in a single session at the height of the ceasefire optimism, driving the national average lower. As of mid-June, US regular gasoline was averaging $4.26 per gallon—still elevated relative to the $2.81 recorded in January, but $0.30 below the seasonal peak.

Consumer and Economic Impact

The direct hit to household spending power was substantial. A per-gallon price at $4.56 represented a $1.38 year-over-year increase at the national level. Goldman Sachs economists flagged that the surge would disproportionately burden lower-income households: the bottom income quintile devotes roughly four times as much of their after-tax income to gasoline compared with the top quintile, compressing discretionary budgets precisely among the consumers with the least flexibility to absorb cost increases. The economic drag was expected to weigh most heavily on spending on vehicles, leisure, and non-essential goods and services.

Geopolitical Dimension

The Strait of Hormuz closure marked a historically unprecedented event in global energy markets—a simultaneous removal of supply on a scale that prior geopolitical crises had not matched. The fragile ceasefire, under which Iran and the United States are reportedly preparing to sign an agreement formalizing the truce and restoring Hormuz passage, is now the single most consequential variable in the near-term gas price forecast. Goldman Sachs noted that a full restoration of Persian Gulf crude exports to pre-conflict levels by end of July remains the base assumption underpinning its revised forecasts.

Outlook

Goldman Sachs projects a continued easing of energy costs through the remainder of 2026, with Brent settling into the low $80s per barrel under the base case and the national gasoline average declining further from its Memorial Day high as Hormuz traffic normalizes. The structural surplus in global crude supply—driven by non-OPEC production growth and the gradual return of Middle Eastern barrels—provides a fundamental ceiling on any near-term price rebound. The primary upside risk remains a breakdown in ceasefire talks, which would rapidly reverse the relief already priced into Goldman Sachs oil market expectations and push energy costs back toward territory that threatened to stall consumer spending entirely.

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