Goldman Sachs forecasts that oil prices will average $76 per barrel next year, citing sufficient supply and ample spare capacity. The investment bank’s analysts stated that while medium-term risks to their price range of $70 to $85 per barrel are balanced, they lean slightly towards the downside. They attribute this to the potential for high spare capacity and broader trade tariffs, which could pose greater risks than any upward price movement.
Currently, oil prices align closely with Goldman’s forecast. On Wednesday morning, Brent Crude prices dropped over 1% to $74.60. Meanwhile, the U.S. benchmark, WTI Crude, fell by 1.8% to $70.40 after the American Petroleum Institute (API) reported a larger-than-expected increase in crude inventories.
Goldman analysts suggest that oil prices could rise by the end of this year due to Brent time spreads not fully accounting for physical tightness in the market. They warned, however, that despite significant global spare capacity and stable Iranian oil production, a supply glut in 2025 is not guaranteed.
The analysts currently see geopolitical risk as limited. However, they caution that the ongoing conflict in the Middle East could escalate tensions and potentially impact oil prices at any time.
Two months ago, Goldman Sachs lowered its expected range for Brent prices by $5, adjusting it to $70-$85 per barrel. This revision was based on weaker oil demand from China, high inventories, and increasing U.S. shale production.
With higher supply expected from the U.S. and possibly from OPEC+ later this year and into 2025, Goldman Sachs believes that Brent Crude prices will remain below $80 per barrel in 2025.
Similarly, Morgan Stanley has revised its oil price forecasts downward. The bank expects increased supply from OPEC and non-OPEC producers and signs of weakening global demand. While it anticipates that the crude oil market will remain tight through the third quarter, it predicts a stabilization in the fourth quarter and a potential surplus by 2025.
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