Goldman Sachs (NYSE:GS) trimmed its oil price projections amid increased tariff escalations and a higher supply from OPEC+ countries.
The Wall Street bank now expects Brent and WTI oil prices to average $69 and $66 per barrel, respectively, in 2025. For 2026, the average prices are projected to be $62 for Brent and $59 for WTI.
Goldman also reduced its December 2025 Brent and WTI forecasts by $5 to $66 and $62, respectively, citing weaker oil demand growth, now anticipated to be only 0.6 and 0.7 million barrels per day (mb/d) for 2025 and 2026. This is down from the earlier estimate of 0.9 mb/d.
The firm has downgraded GDP growth expectations, which contributes $3-4 to the cut in the December 2025 oil price forecast.
“We no longer forecast a price range, because price volatility is likely to stay elevated on higher recession risk,” strategists led by Daan Struyven said in a note.
In May, OPEC+ countries agreed to a larger-than-expected output hike of 411,000 barrels per day (kb/d), compared to the previous guidance of 135 kb/d.
Goldman Sachs interprets this as an indication of low inventories and a strategic shift by OPEC+ to focus on internal compliance and managing non-OPEC supply. The May output hike contributes $2-3 to the December 2025 price target cut, strategists said.
They also expect that the response from non-OPEC supply and demand to lower oil prices will have a price-stabilizing effect, contributing to a $1 reduction in the December 2025 forecast and $8 in December 2026.
However, the strategists caution that the risks to its reduced oil price forecast are skewed to the downside, particularly for 2026, due to the growing potential for a recession and the possibility of further increases in OPEC+ supply.
“The short-term upside risk to prices from lower sanctioned supply has likely also diminished as OPEC has demonstrated its flexibility to rapidly implement large output hikes,” they added.
