Goldman Sachs lowers its forecast for oil prices with expectations of an increase in OPEC+
In a significant shift in the outlook for global oil markets, Goldman Sachs lowered its forecast for crude prices over the coming period, based on expectations of an increase in OPEC alliance production, which may put pressure on prices given the availability of additional supplies in the market.
Adjusting expectations as OPEC production increases
The OPEC+ alliance announced last Saturday an increase in its production for June by 411,000 barrels per day, in line with Goldman Sachs' initial forecast. However, the bank raised its forecast for the alliance's production increase in July to 410,000 barrels per day, compared to a previous forecast of only 140,000 barrels.
Expected Decline in Average Prices
Based on these developments, Goldman Sachs revised its oil price forecasts, expecting Brent crude to average $60 per barrel through the remainder of 2025 and $56 in 2026, down from its previous forecast of $63 and $58, respectively.
As for West Texas Intermediate (WTI), the bank lowered its forecast for average prices to $56 through the end of 2025 and $52 in 2026, compared to previous forecasts of $59 and $55.
Expectations Reflected on Spot Markets
Markets didn't wait long for these expectations to be reflected, with Brent crude futures for July delivery falling sharply by 3.5% to $59.13 per barrel, while WTI crude futures fell by 3.8% to $56.05.
Market Balance Between Supply and Demand
The OPEC+ decision to increase production, along with Goldman Sachs' revised forecasts, appear to point to a new phase of oil market equilibrium, where prices may face downward pressure in the medium term as additional supplies flow.
However, geopolitical factors and global economic developments remain crucial factors that could redirect prices at any time.
Investors are now awaiting developments in the upcoming OPEC+ meetings, as well as global demand data, to determine whether these forecasts prove accurate or whether new surprises await the oil markets.
