The commodities team at Goldman Sachs lowered its 2025-2026 price targets for Brent and West Texas Intermediate crude in a report sent to clients Sunday.

In the report, the bank pointed out the disconnect between low global inventories of oil and soft prices. Goldman analysts said the recent sell-off is larger than what fundamentals would indicate, but they still lowered their forecast for 2025 Brent averages to $71/bbl and now believe that WTI will average about $67/bbl this year. For 2026, the weakness continues with Goldman targeting a $68/bbl average for Brent and $64/bbl for WTI. It also said that Brent will be trapped in a 2025 range between $65/bbl and $80/bbl.

The bank cited two main changes in the oil markets.

First, Goldman calculates that oil demand will grow by only about 900,000 b/d in 2025, or some 200,000 b/d less than the bank's prior assumption. The slowdown will reflect slower U.S. GDP growth impeded by higher tariffs. Of the global decline, Goldman models in a slide of about 130,000 b/d in U.S. consumption with GDP slowing from 2.4% to 1.7%. For all of 2025, analysts expect oil to be in a modest surplus of 600,000 b/d.

Second, the bank said it expects the supply side to tilt to a more bearish assessment. Goldman sees "somewhat higher" OPEC+ supply with initial increases coming in April. It believes that the cartel will concentrate on the problem of compliance. Beyond OPEC+, analysts said they see "supply beats" from the exempt OPEC producers Libya and Iran.

Goldman mentioned a Bloomberg report that tapped expectations on the cartel and suggested that about 80% of traders and analysts had expected the OPEC+ cuts to be extended.

The forecast is contingent on some economic recovery in the U.S. and other western countries, and price targets assume that there will be no easing in energy sanctions against Russia.

Goldman exhorts producers to contemplate hedges to guard against further medium-term downside to crude oil prices and also urges refiners to lock in some very high global distillate margins.

Negotiations by the Trump administration are prominent in the analysis. The bank said that there are additional downside risks to Russian and Iranian supply thanks to negotiations with the former on the Ukraine War and potential talks with Iran on a nuclear deal.

Goldman said it sees Brent hovering above $70/bbl in coming months, but this level has been scrapped as the floor in the trading range. It said that sub-$70/bbl Brent prices will eventually suppress U.S. oil production growth, but the slippage will lag and be less powerful for rebalancing than OPEC cuts.

The bank did not put a precise date on its prediction that crude benchmarks will "recover modestly" in coming months, but it did say it sees Brent and WTI advancing to $74/bbl and $70/bbl, respectively, by June.

Goldman also cited catalysts for relief in the broader economic markets. Damage from tariffs, for example, should be more limited than feared and a shift toward more growth concern may be coming from the Federal Reserve.

This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.

   --Reporting by Tom Kloza, tkloza@opisnet.com; Editing by Michael Kelly,   mkelly@opisnet.com 
 

(END) Dow Jones Newswires

March 17, 2025 10:42 ET (14:42 GMT)

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