Goldman Sachs revised its 2023 earnings forecast for the STOXX 600 index higher on Tuesday, citing rising oil prices stemming from recent geopolitical tensions in the Middle East

They now expect these companies to earn 3% more compared to their previous estimate of no growth. This positive change is mainly because the price of oil has gone up.

"We estimate that a 100-basis-point rise in the cost of debt would knock three percentage points off (STOXX 600's) EPS (earnings per share)," said Lilia Peytavin, portfolio strategist at Goldman Sachs.

In the past few weeks, the cost of Brent crude oil has risen by 6% due to conflicts in the Middle East. Right now, it's trading at around $89 per barrel. The experts at Goldman Sachs think that by the end of the year, the price will be $88 per barrel.

When oil prices go up, companies that deal with commodities, like oil and gas, make more money. That's why Goldman Sachs believes these companies will see their earnings improve.

European oil companies BP, Shell and TotalEnergies have seen their share prices rise 4.5 - 7% as the region's oil and gas sector hits nine-year highs, outperforming the market.

However, when we consider the rising prices of goods and services, Goldman Sachs expects that European companies will actually earn 2% less this year. Another problem is that the cost of borrowing money is going up because interest rates are rising. This could also hurt companies' profits.

Looking ahead, Goldman Sachs predicts that European companies will earn 7% more next year, up from their previous estimate of 5%. This is because they think the price of oil will reach $100 per barrel by the end of 2024.

Goldman Sachs has raised its forecast for how much money European companies will make in 2023 because the price of oil has gone up. However, inflation and higher borrowing costs are still concerns that could affect how much money these companies actually earn.