Oil prices are likely to fall this year as a wave of supply creates a surplus in the market, although geopolitical risks linked to Russia, Venezuela, and Iran will continue to fuel volatility, Goldman Sachs said.
The investment bank kept its average price forecasts for 2026 unchanged at $56/$52 per barrel for Brent/WTI, and expects Brent/WTI prices to bottom out at $54/$50 in the fourth quarter as OECD inventories build.
“The rise in global oil inventories and our forecast of a 2.3 mb/d surplus in 2026 suggest that market rebalancing will likely require lower oil prices in 2026 to curb non-OPEC supply growth and support robust demand growth, absent major supply disruptions or OPEC production cuts,” Goldman Sachs said.
Brent crude futures were trading around $63 a barrel, while U.S. West Texas Intermediate crude was trading at $59. Last year, both benchmarks posted their worst annual performance since 2020, falling by nearly 20%.
The focus of U.S. officials on strong energy supply and relatively low oil prices will keep a sustained rise in oil prices in check ahead of the midterm elections, the bank’s analysts said.
Prices are expected to begin recovering gradually in 2027, with the market returning to a deficit as non-OPEC supply growth slows and strong demand growth continues, Goldman analysts said in a note.
The investment bank forecasts Brent/WTI to average $58/$54 in 2027, about $5 below its previous estimate, citing supply improvements in the United States, Venezuela, and Russia in 2027 of 0.3, 0.,4 and 0.5 mb/d, respectively.
Goldman said it expects a substantial price recovery toward the end of the decade as demand grows through 2040 following years of underinvestment in long-cycle projects, with Brent/WTI prices averaging $75/$71 in 2030–2035, about $5 below its previous estimate.
Risks to the price outlook are skewed modestly to the downside given another increase in non-OPEC supply, Goldman said, adding that it does not expect OPEC production cuts despite geopolitical risks and low speculative positioning.
