By Giulia Petroni

Goldman Sachs revised its oil price estimates downward for the second time this month, citing growing recession risks and higher-than-expected output from the Organization of the Petroleum Exporting Countries and its allies.

Brent crude is now projected at an average of $66 a barrel in 2025 from $69 a previously, while West Texas Intermediate is forecast at $63 a barrel from $65 previously. In 2026, the benchmarks are seen at $58 and $55 a barrel.

"We reduce our oil price forecast further as we incorporate our economists' GDP downgrades from the last few days, including the forecast of a stagnating U.S. economy," analysts at the U.S. bank said. "They have also raised the 12-month U.S. recession probability from 35% to 45%."

Weaker economic growth is expected to hit demand, outweighing support from a softer U.S. dollar and lower oil prices, Goldman said. Global oil demand growth is now seen at 300,000 barrels a day in 2025 and 400,000 barrels a day in 2026, from previous projections of 600,000 and 700,000 barrels a day, respectively.

"Oil prices would likely exceed our forecast if the [U.S.] administration were to reverse tariffs sharply and deliver a reassuring message to markets, consumers, and businesses," the analysts said. "We're particularly focused on whether the country-specific reciprocal tariffs will go fully into effect on April 9."

In early European trade, Brent crude fell 3.4% to $63.34 a barrel, while WTI was down 3.6% at $59.77 a barrel. Both contracts have lost more than 15% this year so far, with recent losses sparked by U.S. President Trump's tariff blitz and OPEC+'s plans for a larger-than-expected output raise in May.

Write to Giulia Petroni at giulia.petroni@wsj.com

(END) Dow Jones Newswires

April 07, 2025 04:57 ET (08:57 GMT)

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