Goldman Sachs has revised its forecast for Brent crude oil’s average price for the year, lowering it by 5.5% to $69 per barrel.
Similarly, the forecast for West Texas Intermediate crude oil prices has been reduced by 4.3% to $66 per barrel, according to a Reuters report.
The investment bank cites two primary reasons for this downward revision: the potential for increased supply from the Organization of the Petroleum Exporting Countries and allies, and the looming threat of a global recession triggered by the ongoing trade war.
The Wall Street brokerage firm also reduced its average price forecast for Brent by 9% to $62 and for WTI by 6.3% to $59 for 2026. It also cautioned that these new estimates could be further lowered.
Recession possibility and higher supply
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“The risks to our reduced oil price forecast are to the downside, especially for 2026, given growing risks of recession and to a lesser extent of higher OPEC+ supply,” Goldman analysts were quoted in the report.
The increased supply from OPEC+ countries could lead to a surplus in the global oil market, putting downward pressure on prices.
Meanwhile, the escalating trade war between major economies could dampen global economic growth and lead to a recession. A recession would likely reduce demand for oil, further depressing prices.
OPEC raises May output
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Eight members of the OPEC+ alliance in a ministerial meeting on Thursday decided to increase oil production by 411,000 barrels per day in May, according to an official statement.
The move is a part of the cartel’s broader plan of unwinding the 2.2 million barrels per day of voluntary production cuts borne by eight OPEC+ members, including Saudi Arabia and Russia.
In April, OPEC members are expected to increase oil production by 135,000 barrels per day.
OPEC said on Thursday:
The gradual increases may be paused or reversed subject to evolving market conditions.
Oil prices slump
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Brent crude oil prices fell over 6% toward $70 per barrel after OPEC’s latest announcement on Thursday.
On Friday, Brent prices slipped further by 1% below the $70 per barrel mark.
The contract was at $69.45 a barrel.
WTI crude oil was at $66.26 per barrel, also down 1% from the previous close.
Crude oil prices experienced a significant decline on Thursday, marking their most substantial percentage drop since 2022.
The drop in oil prices was further intensified by US President Donald Trump’s reciprocal tariffs on Thursday.
OPEC’s surprising decision to increase output in May also added to concerns among investors.
These two factors combined to create a bearish sentiment in the oil market, leading to a sharp sell-off and a significant drop in crude prices.
Demand forecasts
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Goldman Sachs stated that OPEC’s ability to quickly execute substantial production increases indicated flexibility, thereby reducing the probability of a short-term price surge due to decreased supply.
The brokerage firm has revised its oil demand growth forecast for this year downwards from 900,000 barrels per day to 600,000 barrels per day.
It also anticipates a growth of 700,000 bpd in 2026.
