Goldman Sachs: Gas Prices Near 2026 Seasonal Peak

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Goldman Sachs energy analysis suggests U.S. fuel costs 2026 may have peaked seasonally, with the national average retreating from $4.56 as oil slides below $100 per barrel.

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What Happened

The spring 2026 spike in fuel costs traced directly to the effective closure of the Strait of Hormuz in late February, when military action in the Persian Gulf severed a corridor through which nearly 20% of global oil supply transits. Within weeks, pump prices climbed sharply, and the Goldman Sachs energy desk revised its Brent crude outlook to reflect the supply shock: the bank projected Brent averaging $100 per barrel in April and May, with an adverse scenario reaching $125 in July.

A subsequent U.S.-Iran ceasefire prompted Goldman to revise its oil market analysis significantly. The bank trimmed its second-quarter 2026 Brent forecast to $90 per barrel from $99, and its West Texas Intermediate projection to $87 from $91. The base case now places Brent at $82 in the third quarter and $80 in the fourth — a trajectory implying sequential relief at retail pumps through the remainder of the year.

Seasonal Context

The gas price forecast environment entering June reflects an atypical seasonal calendar. Under normal conditions, prices peak between late May and July when summer-blend fuel mandates raise refinery costs and vacation travel lifts demand. In 2026, geopolitical forces front-loaded the surge, pulling the effective seasonal high into April and May. With crude stabilizing below $100, the seasonal dynamic now favors gradual normalization through summer.

The U.S. Energy Information Administration had revised its full-year retail gasoline forecast to approximately $3.70 per gallon for 2026, up from a $3.10 average in 2025, with an April estimate of $4.30 reflecting the peak shock. The June retreat suggests actual annual-average prices are tracking closer to the EIA's revised baseline.

Market Reaction

Oil markets have responded to easing Strait of Hormuz tensions and rising OPEC+ supply. Goldman Sachs commodity analysts project a global oil surplus averaging approximately 1.8 million barrels per day between Q4 2025 and Q4 2026 — a structural excess the bank expects to pull crude progressively lower. In its most extended scenario, Goldman sees Brent declining to the low $50s per barrel by late 2026, a level that would translate to U.S. retail gasoline near or below $2.50 per gallon — a stark reversal from the spring peak.

Consumer and Economic Impact

Goldman economists linked the spring 2026 gasoline spike to measurable deterioration in consumer health. The bank lowered its U.S. consumption growth forecast from above 2% to 1.2% for 2026 and cut its fourth-quarter GDP growth projection by 0.5 percentage points to 2.0%, with energy costs cited as the primary drag. Goldman economist Jessica Rindels noted that higher gasoline prices weigh with particular force on spending on cars and discretionary goods and services.

The distributional burden was stark. Households in the lowest income quintile devote roughly four times as much of their after-tax income to gasoline as those in the top quintile, amplifying the macroeconomic impact of price spikes well beyond headline averages. The University of Michigan Consumer Sentiment Index fell to a record low of 47.6 in the spring — an 11% decline in a single month — registering the energy shock in behavioral data as well as economic projections.

Goldman cautioned that the pass-through of wholesale energy price changes to consumer spending occurs with a lag. Even as pump prices ease, the bank anticipates continued softness in discretionary spending through the third quarter before a more pronounced recovery emerges if crude follows the projected downward path in Q4.

Outlook

With U.S. gasoline prices declining for three consecutive weeks through mid-June 2026 and Goldman Sachs' oil market analysis pointing to a structurally oversupplied market through year-end, the conditions for continued normalization in fuel costs are in place. Goldman's base case — Brent at $80 by Q4, with a longer-term drift toward the low $50s — would translate to retail gasoline prices approaching or falling below $3.00 per gallon by early 2027 if realized. Near-term risks remain skewed to the upside given residual geopolitical uncertainty in the Persian Gulf. The seasonal high in pump prices, however, appears by Goldman's own gas price forecast to have passed.