Goldman Sachs Lowers Oil Price Forecast - Tariffs Affect Demand, OPEC Production Pressures Market
A recent report by Goldman Sachs indicates that due to tariff policies affecting U.S. economic growth prospects and increased oil supply from OPEC and its allies (OPEC+), the global crude market is under dual pressure, leading the bank to lower its oil price prediction.
Brent Crude Expected to Fall to $71 WTI Target at $67
Goldman analysts noted in a Sunday report that Brent crude oil prices are expected to drop to $71 per barrel in December, down by $5 from their prior forecast, and WTI crude prices are expected to drop to $67. Additionally, Brent crude oil prices are anticipated to fluctuate within the $65 to $80 range per barrel, with an average price of $68 per barrel by 2025.
Analysts stated, "Due to the potential for tariffs to continue escalating and the likelihood of prolonged production increases from OPEC+, our medium-term oil price forecast remains at risk of downside."
Tariffs Drag on Demand, Increased OPEC Supply Aggravates Imbalance
One of the main reasons for Goldman Sachs' downward oil price outlook is the slowdown in global oil demand. The bank has reduced its 2024 global oil demand growth forecast by 18%, to 900,000 barrels per day, primarily due to a slowing U.S. economy. The rise in tariffs has lowered expectations for U.S. economic growth, thereby affecting energy consumption demand.
Meanwhile, the increase in OPEC+ production presents greater challenges to the market's supply-demand balance. Although OPEC+ has previously supported oil prices through production cuts, some member countries have recently begun gradually increasing output, raising market supply and further restricting the potential for oil price increases.
Oil Prices Continue to Decline, Future Trends Still Pose Downward Risks
Amid the supply-demand imbalance, Brent crude oil prices have retreated about 14% from this year's high. As of Monday, Brent crude was trading at around $71 per barrel.
Analysts believe that if tariff policies lead to further global economic growth slowdowns or if OPEC+ fails to take effective measures to control output, oil prices may remain under pressure. The market will closely monitor future trade policy developments and OPEC+ production decisions to gauge further oil price trends.
