In a move reflecting growing concerns over global economic health, Goldman Sachs has revised its oil price forecasts downward, citing anticipated deceleration in U.S. economic growth and a potential oversupply in the oil market.
Revised Projections
Goldman Sachs analysts have adjusted their December 2025 forecast for Brent crude oil, reducing it by $5 to $71 per barrel, with West Texas Intermediate (WTI) projected at $67 per barrel. They also revised their Brent price range to $65-$80 and set the 2026 average forecast at $68 for Brent and $64 for WTI.
Factors Influencing the Downgrade
Several key elements have influenced this reassessment:
- Trade Tensions: Escalating trade disputes, particularly those involving the United States and major trading partners such as Canada, China, and Mexico, are expected to impede economic growth. The imposition of tariffs has raised concerns about a global economic slowdown, which could dampen oil demand.
- OPEC+ Production: The Organization of the Petroleum Exporting Countries and its allies (OPEC+) are anticipated to increase oil production, potentially leading to an oversupplied market. This expected rise in supply contributes to downward pressure on oil prices.
- Demand Outlook: The forecast for oil demand growth has been reduced by 18%, now projected at 900,000 barrels per day, reflecting a more conservative view of global consumption amid economic uncertainties.
Market Reactions and Broader Implications
These revised forecasts arrive at a time when oil markets are already grappling with volatility. Recent U.S. military actions in the Middle East have contributed to fluctuations in oil prices, with Brent futures recently rising by 0.6% to $70.99 per barrel and WTI increasing by 0.6% to $67.58 per barrel.
Additionally, U.S. consumer sentiment has declined sharply, reaching a nearly two-and-a-half-year low in March, amid concerns that tariffs could lead to higher prices and economic deceleration. This sentiment is likely to influence consumer behavior and, consequently, energy consumption patterns.
The Federal Reserve is expected to maintain current interest rates as it assesses the economic impact of these developments, balancing the need to support growth while monitoring inflationary pressures.
Goldman Sachs’ downward revision of oil price targets underscores the intricate interplay between geopolitical events, trade policies, and energy markets. As uncertainties persist, stakeholders in the oil industry must navigate these challenges with strategic agility to mitigate risks associated with fluctuating demand and supply dynamics.
