Introduction
Goldman Sachs has revised its oil price outlook amid a complex mix of economic and geopolitical assumptions. The investment bank now forecasts that Brent crude will fall to $62 per barrel and West Texas Intermediate (WTI) to $58 per barrel by December 2025. Looking ahead to December 2026, further declines are expected—with Brent at $55/bbl and WTI at $51/bbl. These projections rest on two key assumptions: the avoidance of a severe U.S. recession driven by substantial tariff reductions (set to begin on April 9) and a moderate increase in global supply from OPEC+ through two increments of 130-140 thousand barrels per day (kb/d) in June and July.
However, Goldman Sachs also outlines alternative scenarios where oil prices could deviate from these forecasts. A sharp reversal in tariff policy could propel prices above current estimates, while a deeper global GDP slowdown could push Brent down further—to $54/bbl by December 2025 and $45/bbl by December 2026. In the most extreme scenario, a global recession combined with a full unwind of OPEC+ cuts might drive Brent to just under $40/bbl in late 2026. Despite this possibility, the bank notes that oil prices are “unlikely to fall well below $40/bbl on a sustained basis” due largely to the price floor provided by U.S. shale production and the expectation that any U.S. recession in 2025 will be relatively mild.
Key Takeaways
Baseline Forecasts:
December 2025: Brent at $62/bbl, WTI at $58/bbl.
December 2026: Brent at $55/bbl, WTI at $51/bbl.
Alternative Scenarios:
A sharp tariff policy reversal could push prices higher than current estimates.
A global GDP slowdown could lower Brent to $54/bbl in 2025 and $45/bbl in 2026.
In a worst-case scenario (global downturn plus full unwind of OPEC+ cuts), Brent might fall to just under $40/bbl by late 2026.
Price Floor Factors:
U.S. shale production is expected to provide a resilient price floor.
A potential U.S. recession, if it occurs in 2025, is anticipated to be mild due to strong private sector fundamentals.
Detailed Analysis
Baseline Assumptions
Goldman Sachs’ primary forecast hinges on two key assumptions:
Tariff Reduction:
The U.S. is expected to enact significant tariff reductions starting April 9, which should help stabilize consumer and business confidence, thereby avoiding a deep recession.
Moderate OPEC+ Supply Increases:
The bank anticipates two incremental increases of 130-140 kb/d by OPEC+ in June and July, which would modestly boost global supply while keeping market disruptions limited.
Under this baseline scenario, the expected declines in Brent and WTI reflect falling global oil prices amid easing demand pressures and a balanced supply picture.
Alternative Scenarios
Goldman Sachs also outlines two alternative scenarios that could shift this forecast:
Reversal of Tariff Policy:
A sharp change in U.S. tariff strategy—if policymakers ease restrictions or strike new trade deals—could lessen economic headwinds, potentially leading to higher oil prices than currently forecast.
Global GDP Slowdown and Full Unwind of OPEC+ Cuts:
Should global GDP growth slow more than expected, the analysis projects Brent could decline further to $54/bbl in 2025 and $45/bbl in 2026.
In a more extreme scenario—combining a global economic downturn with a full unwind of OPEC+ production cuts—Brent might fall to just under $40/bbl by late 2026.
Despite this, robust U.S. shale production is expected to provide a critical price support mechanism, and any U.S. recession is projected to be relatively moderate.
Market Implications
Investors and market participants must remain alert to the following:
Volatility and Divergence:Oil market volatility may persist, especially if geopolitical events or shifts in tariff policy create unexpected supply or demand changes.
Economic Data and Policy Decisions:Key economic indicators and policy decisions—particularly from the U.S. regarding tariffs and GDP growth—will play a crucial role in determining oil price trajectories over the next two years.
Real-Time Data Resources
To keep a pulse on these trends and refine your investment strategies, consider accessing the following real-time data tools:
Commodities APIMonitor real-time price movements for oil and other commodities. This API offers historical data and trends for assets like Brent crude and WTI, enabling investors to analyze market dynamics amid shifting supply and demand signals.
Economics Calendar APIStay updated on key economic events that affect oil markets, such as GDP reports, employment data, and tariff policy announcements. This tool helps investors forecast how macroeconomic trends may impact oil prices.
Conclusion
Goldman Sachs’ revised forecast suggests that Brent and WTI oil prices are likely to decline over the next two years, assuming the U.S. avoids a severe recession and OPEC+ increases supply moderately. However, the potential for tariff policy reversals or a deeper global GDP slowdown could shift these projections dramatically. Given the crucial role of U.S. shale production and the likelihood of a mild U.S. recession, the investment bank is cautious yet realistic about the lower bound for oil prices.
