The global oil market is currently navigating a complex interplay of geopolitical tensions, evolving supply-demand dynamics, and broader macroeconomic trends. Investment banking giant Goldman Sachs has affirmed its long-term oil price forecasts, projecting Brent crude to average $64 per barrel in the fourth quarter of 2025 and $56 per barrel for the entirety of 2026. However, these projections are increasingly subject to a wide spectrum of risks that could significantly alter market trajectories.
- Goldman Sachs forecasts Brent crude prices to average $64/bbl in Q4 2025 and $56/bbl in 2026.
- Intensifying pressure on sanctioned Russian and Iranian oil output presents a notable upside risk to these price forecasts.
- Significant downside risks include recent U.S. tariff increases, potential secondary tariffs, and weak U.S. economic activity signaling recessionary potential.
- OPEC+ recently agreed to increase oil production by 547,000 barrels per day for September to regain market share.
- Despite sanctions, large-scale disruptions to Russian oil supply are assessed as limited, though Indian state refiners recently halted purchases due to narrowed discounts and U.S. warnings.
Supply-Side Dynamics: Upside Potential
On the supply front, the global oil market faces significant upside risks stemming from intensifying pressure on oil output from sanctioned nations, particularly Russia and Iran. This potential for higher prices is further amplified by a quicker-than-anticipated normalization of global spare production capacity. Should disruptions materialize in these key supply regions, the market could rapidly tighten, pushing crude prices well above current estimates and challenging existing equilibrium points.
Demand Outlook: Emerging Downside Risks
Conversely, the demand outlook is shadowed by several notable downside risks. Goldman Sachs’ average annual demand growth forecast of 800,000 barrels per day for the 2025-2026 period is encountering headwinds from recent increases in U.S. tariff rates and the looming threat of additional secondary tariffs. Furthermore, recent U.S. economic activity data indicates growth below its potential, escalating the likelihood of a recession within the next 12 months. Such an economic contraction would inevitably curb global oil consumption, putting downward pressure on prices.
OPEC+ Strategy and Market Influence
In terms of policy, the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, recently concluded an agreement to increase oil production by 547,000 barrels per day for September. This move aligns with a broader strategy of accelerated output hikes aimed at recapturing market share. Goldman Sachs anticipates that OPEC+ will likely maintain its current production quota beyond September, factoring in expected accelerated builds in OECD commercial stocks and a seasonal decline in demand.
Geopolitical Pressures on Russian Oil Exports
Despite the comprehensive international sanctions levied against Russia, analysts generally assess a limited risk of large-scale, sustained disruptions to its oil supply. This assessment is largely attributed to significant crude imports by major buyers such as China and India, alongside Russia’s demonstrated capacity to offer deeper price discounts to preserve demand. However, a recent development saw Indian state refiners halt their purchases of Russian oil. This decision followed a period of narrowed discounts on Russian crude, coupled with public warnings from U.S. President Donald Trump discouraging oil transactions with Moscow, collectively influencing buying decisions within the sensitive geopolitical landscape.
Michael Carter holds a BA in Economics from the University of Chicago and is a CFA charterholder. With over a decade of experience at top financial publications, he specializes in equity markets, mergers & acquisitions, and macroeconomic trends, delivering clear, data-driven insights that help readers navigate complex market movements.