In a recent development that has sent ripples through the global energy sector, Goldman Sachs has lowered its oil price forecasts for the third time this month, citing weaker than expected demand growth and the uncertainty surrounding geopolitical and trade tensions.
According to a reports the investment bank now expects Brent crude to average $63 per barrel in 2025, down from its previous forecast of $69. Meanwhile, West Texas Intermediate (WTI) is projected to average $59 per barrel, with both benchmarks forecasted to decline further in 2026, to $58 for Brent and $55 for WTI, respectively.
Economic Pressures and Tariff Tensions Drive Down Outlook
The revised forecast reflects Goldman’s growing caution over the direction of oil markets, particularly in light of U.S. President Trump’s renewed tariff war, which began in early April. Analysts at the bank note that a reversal of the trade restrictions could lead to a rebound in prices, but until then, downside risks dominate.
“Oil prices would likely exceed our forecast if the Administration were to reverse tariffs sharply and deliver a reassuring message to markets, consumers, and businesses,” Goldman Sachs analysts stated.
The bank now anticipates oil demand growth of just 300,000 barrels per day (bpd) in 2025 significantly below earlier projections. For 2026, it has cut its demand forecast by 900,000 bpd for Q4 alone.
OPEC+ and Recession Risks Amplify Uncertainty
Adding to bearish sentiment, Goldman warned that should OPEC+ dismantle production quotas established in 2023, Brent prices could plummet into the $40s, potentially dipping below $40 per barrel in an extreme scenario.
The forecast acknowledges a growing risk of global recession, which, paired with potential supply increases from OPEC+ members, could create a perfect storm for oil markets.
“The risks to our reduced oil price forecast are to the downside, especially for 2026,” Goldman said in an earlier note. The bank cited economic fragility and tariff-induced trade disruption as key variables that could further destabilise the market.
Market Reaction and Strategic Implications
Investors have responded cautiously, with oil futures reflecting tepid gains even as price volatility continues. The outlook has implications not only for producers in the U.S. shale belt but also for budget-reliant oil economies, many of which are grappling with fiscal planning amidst price instability.
What’s Next for Oil Markets?
While the long-term trajectory remains uncertain, Goldman’s repeated forecast cuts highlight a fundamental shift in market expectations. As negotiations around the U.S.–China trade war continue and global macroeconomic indicators remain mixed, oil prices are likely to stay rangebound, with supply-side discipline and geopolitical signals playing critical roles in the months ahead.
