Goldman Sachs Adjusts Oil Price Predictions Amid Economic Concerns

Goldman Sachs has revised its outlook for oil prices, highlighting significant economic factors affecting the market. The investment bank has reduced its average price forecast for Brent crude this year by 5.5% to $69 per barrel and for West Texas Intermediate (WTI) by 4.3% to $66. This adjustment stems from concerns over increased supply from OPEC+ and the potential repercussions of the escalating global trade war.

Updated Price Forecasts

The new estimates for 2026 also reflect a bearish sentiment, with Goldman lowering its Brent price forecast by 9% to $62 and WTI by 6.3% to $59. Analysts emphasize that the uncertainties surrounding these forecasts lean towards further declines. "The risks to our reduced oil price forecast are predominantly downside, particularly for 2026 due to heightened recession risks and, to a lesser extent, increased OPEC+ supply," noted Goldman Sachs analysts in their report.

• Current Market Prices:
  • Brent crude at $69.59 per barrel
  • WTI at $66.39 per barrel

Market Reactions to Tariffs and OPEC+ Decisions

Thursday witnessed a dramatic shift in crude prices, marking the most significant percentage drop since 2022. This downturn came on the heels of U.S. President Donald Trump imposing reciprocal tariffs on multiple countries and an unexpected decision by eight OPEC+ members to accelerate production cuts. Goldman pointed out that OPEC’s swift response to boost output diminishes the chances for price recovery in the near term.

The bank now anticipates oil demand growth to slow to 600,000 barrels per day (bpd) this year, a decrease from the previous estimate of 900,000 bpd. For 2026, they expect a modest increase of 700,000 bpd.

Escalating Trade War Impacts

The oil market faced additional pressure as China announced a 34% tariff on U.S. goods, intensifying the trade war and leading investors to brace for a higher likelihood of recession. As a result, crude prices plummeted by 7% on Friday, settling at their lowest levels in over three years.

• Key Price Movements:
  • Brent crude futures fell $4.56, or 6.5%, to $65.58 per barrel
  • WTI crude futures dropped $4.96, or 7.4%, to $61.99

At one point, Brent slid to $64.03, while WTI hit $60.45, marking their lowest points in four years. Over the week, Brent recorded a 10.9% decline, its steepest weekly loss in 18 months, while WTI experienced a 10.6% decrease, the largest drop in two years.

Economic Forecasts and OPEC+ Adjustments

Federal Reserve Chair Jerome Powell has warned that the implications of Trump’s tariffs could lead to higher inflation and slower economic growth, complicating decisions for the U.S. central bank. In a further effort to stabilize the market, OPEC+ has decided to expedite their output increase plans, now aiming to add 411,000 bpd in May, a significant rise from the previously planned 135,000 bpd.

Additionally, a Russian court ruling allowing the Caspian Pipeline Consortium to maintain its Black Sea export terminal has also contributed to the downward pressure on oil prices, preventing a potential decline in Kazakhstan’s production.

Adjustments and Future Outlook

In light of these developments, Goldman Sachs has notably cut its December 2025 targets for both Brent and WTI by $5, bringing them to $66 and $62, respectively. "The downside risks to our oil price forecasts are significant, especially for 2026, given the rising threat of recession and the potential for increased OPEC+ supply," stated Daan Struyven, Goldman’s head of oil research.

Meanwhile, HSBC has also revised its 2025 global oil demand growth forecast down from 1 million bpd to 0.9 million bpd, attributing this adjustment to the tariffs and OPEC+ decisions.

As market dynamics continue to evolve, the oil industry remains on high alert, with analysts closely monitoring the implications of geopolitical actions and economic forecasts on future pricing trends.