Goldman Sachs commodity analysts cut the bank’s price outlook for crude oil, basing the revision on expectations of slower U.S. economic growth and additional OPEC+ supply.
“While the $10 a barrel selloff since mid-January is larger than the change in our base case fundamentals, we reduce by $5 our December 2025 forecast for Brent to $71,” the team said in a note, adding that “The medium-term risks to our forecast remain to the downside given potential further tariff escalation and potentially longer OPEC+ production increases.”
It is worth noting here that OPEC+ is unlikely to keep adding oil supply just because it said it would, regardless of what direction prices are moving in. Indeed, Russia’s top OPEC+ official, Deputy Prime Minister Alexander Novak said earlier this month the decision to add supply could be reversed as soon as May if prices slump.
OPEC+ said it would add some 138,000 bpd to its collective supply next month in a long-awaited wind-down of the 2022 production cuts that is in all likelihood temporary given how sensitive oil prices remain to any move by OPEC+.
As regards U.S. growth, Goldman analysts believe this will be negatively affected by President Trump’s tariff wars with trade partners. Many analysts argue that tariffs hurt economic growth by making goods and commodities costlier for the end consumer. As the most traded commodity in the world, crude oil demand is inevitably going to see an impact from the tariff exchange.
In addition to these, Goldman analysts also believe the oil market will remain oversupplied this year, adding to bearish drivers. The expectation chimes in with similar remarks recently made by commodity trading majors including Gunvor and Vitol, as well as the International Energy Agency, despite its chief’s recent call for more investment in new oil and gas production.
By Irina Slav for Oilprice.com
