Goldman Sachs Estimates Oil Prices To Continue Falling In 2026 As US-China Trade War Escalates

Global oil demand is expected to rise by just 300,000 bpd between 2024 end to 2025 end, reflecting a sluggish economic backdrop and a deepening trade rift between the US and China, the bank said.

The investment bank cited mounting recession risks and an anticipated surge in supply from OPEC+ as key reasons behind its bearish forecast.

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Oil markets are headed for a prolonged period of softness, according to a new outlook from Goldman Sachs, which projected a gradual decline in prices through the end of 2026. The investment bank cited mounting recession risks and an anticipated surge in supply from OPEC+ as key reasons behind its bearish forecast.

Both Brent and West Texas Intermediate (WTI) crude are expected to experience moderate declines, the bank noted. For the remainder of 2025, Goldman forecasted Brent to average $63 per barrel and WTI to hover around $59, reported Reuters. The pressure is set to intensify in 2026, with prices projected to fall further to $58 and $55 per barrel, respectively.

Muted Demand, Rising Supply Create Oversupply Concerns

Global oil demand is expected to rise by just 300,000 barrels per day (bpd) between the end of 2024 and the close of 2025, reflecting a sluggish economic backdrop and a deepening trade rift between the US and China. “Given the weak growth outlook amid a global trade war,” Goldman noted, consumption will struggle to gain momentum.

The bank also trimmed its demand growth estimate for the final quarter of 2026 by 900,000 bpd since mid-March, attributing the revision to escalating tensions between the world’s two largest economies. Last week, Beijing imposed tariffs of up to 125 per cent on American imports in response to President Donald Trump’s move to raise duties on Chinese goods—a retaliatory step that threatens to further disrupt global trade flows.

Supply-side dynamics are adding to the bearish outlook. Despite markets having priced in some inventory builds, Goldman anticipated large surpluses of 800,000 bpd in 2025 and 1.4 million bpd in 2026, which are likely to weigh on prices. The bank also trimmed its US shale supply forecast for Q4 2026 by 500,000 bpd.

In a scenario where global growth slows significantly or OPEC+ unwinds its 2.2 million bpd in voluntary production cuts, Goldman noted that Brent prices could slide into the $40s by 2026. Under more extreme conditions, prices might dip below that level.