Analyst warns of downside risks to oil price forecasts for 2025-2026
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Analyst has flagged potential downside risks to its oil price forecasts for 2025 and 2026, citing higher-than-expected crude supply and a possible demand slowdown due to weakening U.S. economic activity and escalating trade tariffs. In a note released Monday, the investment bank projected Brent crude to average $78 per barrel in 2025 and $73 in 2026, trading within a range of $70-$85. Similarly, U.S. West Texas Intermediate (WTI) crude is forecasted to average $74 per barrel in 2025 and $68 in 2026.
On Tuesday, Brent futures declined 0.7% to $71.14 per barrel, while WTI crude eased 0.4% to $68.09, reflecting ongoing market concerns. Analyst cautioned that in a risk scenario where OPEC+ expands supply for 18 months, Brent prices could drop into the low-to-mid $60s by the end of 2026.
Trade tensions remain a key factor influencing oil price projections. U.S. President Donald Trump’s newly enacted 25% tariffs on Mexican and Canadian imports, alongside the doubling of duties on Chinese goods to 20%, have intensified trade disputes with the country’s top three trading partners. However, Goldman Sachs assessed that tariffs on oil imports from Canada and Mexico, or broader U.S. crude import tariffs, would have limited impact on Brent or WTI prices. The primary effect would likely be a reduction in the producer price for non-U.S. heavy crude oil subject to tariffs, while U.S. refined product prices, particularly in coastal regions, could see an increase.
Additionally, the bank noted potential downward revisions to its 2025 global oil demand growth estimate of 1.1 million barrels per day. This caution stems from weaker-than-expected U.S. economic data, ongoing tariff uncertainties, and signs of softness in Chinese oil demand.
As markets navigate these risks, investors will closely monitor supply-side developments from OPEC+, trade policy shifts, and broader macroeconomic indicators to assess the future trajectory of oil prices.
On Tuesday, Brent futures declined 0.7% to $71.14 per barrel, while WTI crude eased 0.4% to $68.09, reflecting ongoing market concerns. Analyst cautioned that in a risk scenario where OPEC+ expands supply for 18 months, Brent prices could drop into the low-to-mid $60s by the end of 2026.
Trade tensions remain a key factor influencing oil price projections. U.S. President Donald Trump’s newly enacted 25% tariffs on Mexican and Canadian imports, alongside the doubling of duties on Chinese goods to 20%, have intensified trade disputes with the country’s top three trading partners. However, Goldman Sachs assessed that tariffs on oil imports from Canada and Mexico, or broader U.S. crude import tariffs, would have limited impact on Brent or WTI prices. The primary effect would likely be a reduction in the producer price for non-U.S. heavy crude oil subject to tariffs, while U.S. refined product prices, particularly in coastal regions, could see an increase.
Additionally, the bank noted potential downward revisions to its 2025 global oil demand growth estimate of 1.1 million barrels per day. This caution stems from weaker-than-expected U.S. economic data, ongoing tariff uncertainties, and signs of softness in Chinese oil demand.
As markets navigate these risks, investors will closely monitor supply-side developments from OPEC+, trade policy shifts, and broader macroeconomic indicators to assess the future trajectory of oil prices.