The tariff wars and high spare capacity, mostly from the OPEC+ producers, are skewing the oil price risk to the downside in the medium term, according to Goldman Sachs.
“While we reduced our Brent forecast range by $5/bbl to $65-80, we expect oil prices to edge up in coming months, and think that market pricing of volatility and of the upside risk from potentially lower sanctioned supply remains too low,” Goldman Sachs analysts wrote in a Tuesday note carried by Reuters.
Russia’s President Vladimir Putin agreeing to a 30-day halt of attacks on energy infrastructure reduces the probability of near-term tightening of the sanctions against Russia, according to Goldman Sachs.
Earlier this week, Goldman Sachs cut its year-end forecast for Brent Crude prices, citing expectations of slower U.S. economic growth and additional OPEC+ supply.
“While the $10 a barrel selloff since mid-January is larger than the change in our base case fundamentals, we reduce by $5 our December 2025 forecast for Brent to $71,” the investment bank’s research team said in a note, adding that “The medium-term risks to our forecast remain to the downside given potential further tariff escalation and potentially longer OPEC+ production increases.”
OPEC+ is set to start adding supply to the market in April, initially at a rate of 138,000 barrels per day (bpd). However, officials within the group have repeatedly said that the production increase could be halted or reversed at any time, depending on market conditions.
HSBC analysts also see risks in oil skewed to the downside amid expectations of a surplus this year and next. Stronger supply growth compared to more sluggish demand growth would leave the oil market in a 200,000-bpd surplus this year, the bank said in a note. In the previous market view, HSBC expected a relatively balanced oil market in 2025.
By Tsvetana Paraskova for Oilprice.com
