Goldman Sachs Revises Oil Price Forecasts Amid Global Supply Surge And Economic Slowdown

Goldman Sachs has adjusted its oil price forecasts, citing a confluence of factors including escalating global supply and a decelerating U.S. economy. The investment bank now projects brent crude to average $71 per barrel by December, a $5 decrease from its prior estimate, and West Texas Intermediate to reach $67 per barrel.

This downward revision aligns with the bank's updated expectations for global oil demand growth, now anticipated at 0.9 million barrels per day for 2025, down from the previous forecast of 1.1 mb/d. The adjustment reflects concerns over a potential U.S. economic slowdown, exacerbated by heightened tariffs and trade tensions.

Concurrently, the Organization of the Petroleum Exporting Countries and its allies have announced plans to increase oil production starting in April. This decision marks the first output hike since 2022 and is set to commence one quarter earlier than Goldman Sachs had previously anticipated. The planned increment of 138,000 barrels per day is expected to further pressure oil prices, especially amid existing concerns over global economic growth and demand.

Kazakhstan has notably led this surge in production, achieving an all-time high output of 1.767 million barrels per day in February, significantly surpassing its OPEC+ quota of 1.468 million barrels per day. Other member countries, including the United Arab Emirates, Nigeria, and Gabon, have also exceeded their production quotas, contributing to the overall increase in supply.

The U.S. Energy Information Administration forecasts that global oil markets will remain relatively tight through mid-2025. However, it anticipates that inventories will build later in the year as OPEC+ unwinds production cuts and non-OPEC oil production rises. This projected increase in supply is expected to place downward pressure on oil prices, with Brent crude potentially averaging $68 per barrel in 2026.

The International Energy Agency echoes this sentiment, projecting that global oil demand growth will accelerate to just over 1 mb/d in 2025, up from 830 kb/d in 2024, reaching 103.9 mb/d. Asia is expected to account for almost 60% of these gains, led by China, where petrochemical feedstocks will provide the entirety of growth. Despite this, recent delivery data have been below expectations, leading to slightly lower estimates for fourth-quarter 2024 and first-quarter 2025 growth at 1.2 mb/d year-on-year.

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