Goldman Sachs: Oil prices could fall close to US$40
NEW YORK - US investment bank Goldman Sachs expects Brent and WTI oil prices to fall to US$62 and US$58 per barrel respectively by December 2025, and further to US$55 and US$51 by December 2026.
These projections are based on two key assumptions. First, the US economy will avoid recession thanks to significant tariff cuts that will begin on 9 April 2025. Second, OPEC+ will moderately increase supply through two increases of 130-140k barrels per day each in June and July 2025.
The investment bank also outlined several scenarios in which oil prices could deviate from these projections. In the event of a sharp reversal in American tariff policy, oil prices could exceed Goldman Sachs' current estimate.
On the other hand, if the US experiences a normal recession while sticking to the OPEC+ oil production baseline, Brent oil prices could fall to US$58 per barrel by December 2025 and to US$50 the following year.
According to Goldman Sachs, in a scenario where global GDP growth slows down, it is estimated that Brent prices could fall to US$54 per barrel in December 2025 and to US$45 in December 2026.
‘We expect a similar price path assuming our GDP baseline and full cancellation of the 2.2 million barrels per day cut from OPEC+,’ Goldman Sachs strategists led by Yulia Zhestkova Grigsby wrote in a note as quoted by investing.com.
In a more extreme scenario, combining a decline in global GDP with a complete halt to OPEC+ production cuts, which in turn would discipline supply from outside OPEC, the strategists project that Brent oil prices could fall to near $40 per barrel by the end of 2026.
However, they note that oil prices are unlikely to fall much below US$40 per barrel for long. There are two reasons why this could happen.
First, shale oil production in the US is likely to provide a stronger price ceiling at low levels. Second, the potential US recession in 2025 is not expected to be severe. ‘Partly due to the absence of significant financial imbalances in the private sector,’ Goldman Sachs strategists said. (DH/MT/LM)