As trade tensions escalate and the global economic growth outlook dims, along with OPEC+ potential production increases, Crude Oil Product bulls may be in for a tough time...
Goldman Sachs expects that due to the rising risk of economic recession and an increase in OPEC+ supply, oil prices will continue to decline at the end of this year and into next year.
The bank again expects that Brent and WTI oil prices will decline slightly, with average prices for the remainder of 2025 at $63 and $59 per barrel respectively, and in 2026 at $58 and $55 respectively.
In light of the weak growth prospects amid the global trade war, the bank expects oil demand to grow by only 0.3 million barrels per day from the end of last year to the end of 2025. Since mid-March, the bank has revised down its global demand growth forecast for the fourth quarter of 2026 by 0.9 million barrels per day.
This Wall Street investment bank predicts that despite the market having absorbed some expectations for future inventory increases, the significant oversupply of 0.8 million barrels per day in 2025 and 1.4 million barrels per day in 2026 will continue to exert downward pressure on oil prices.
The bank stated that in the context of a global economic slowdown and OPEC+ fully reversing a voluntary production cut of 2.2 million barrels per day, Brent crude oil prices are likely to fall into the $40 range in 2026, and could even drop below $40 in extreme scenarios.
Goldman Sachs has also lowered its supply forecast for US Shale Oil in the fourth quarter of 2026 by 0.5 million barrels per day.
After experiencing two consecutive weeks of decline, Brent crude oil prices edged down to around $64 per barrel on Monday, while WTI crude oil prices hovered around $60. Despite President Trump's suspension of import tariffs on certain electronic products, he also stated that a specific tariff would be announced at an appropriate time.
Meanwhile, the easing of tensions between the USA and Iran may bring prospects for improving supply. The talks held in Oman over the weekend marked the highest-level contact between the USA and Iran since 2022, indicating both sides' renewed efforts to resolve the years-long deadlock surrounding Iran's nuclear program. Both parties agreed to meet again.
Recent severe fluctuations in the Global market have reignited concerns that this year's Global oil supply will exceed demand. Traders will closely examine the monthly outlook report from OPEC scheduled to be released later on Monday for clues about the fundamentals of the oil market. The International Energy Agency (IEA) will release a report on Tuesday that will include preliminary forecasts for 2026 for the first time.
"Although the market has absorbed expectations of a stock increase in the future, we expect a significant surplus," said analysts led by Daan Struyven of Goldman Sachs in a report.
This month's decline in oil prices is part of the Global market's fierce reaction to the evolving trade war, with most CSI Commodity Equity Index and Stocks falling. The dollar and US Treasury bonds, which typically serve as a safe haven during times of pressure, have also experienced an unusual decline.
"I believe the Crude Oil Product has limited upside potential," said Vandana Hari, founder of Vanda Insights, after oil prices rose slightly on the last trading day last Friday. "The question is whether Crude Oil Product will maintain the momentum from last Friday's rise or stall again? This entirely depends on the tone that Trump sets on the tariff issue."
