Oil prices are facing increasing downward pressure as concerns mount over the potential fallout from U.S. President Donald Trump’s sweeping tariffs. Businesses and investors are now fearing the start of a trade war and the possibility of slowing global growth.
Goldman Sachs lowered its oil price forecast on Thursday, cutting its December 2025 predictions for global oil benchmarks, including Brent crude and U.S. West Texas Intermediate (WTI), by $5 per barrel. The bank now expects Brent to average $66 per barrel and WTI to hit $62 per barrel, citing the growing risks of tariff escalation and increased oil supply from OPEC+ nations.
The bank also reduced its oil price expectations for 2025 and 2026, stating that it would no longer provide a price range due to the heightened risk of a global recession. Analysts at S&P Global Market Intelligence warned that global oil demand could be cut by 500,000 barrels per day in the worst-case scenario. Meanwhile, JPMorgan raised its forecast for the likelihood of a global recession to 60%, up from a previous estimate of 40%.
Despite these bearish forecasts, markets were shocked when OPEC, which controls about 40% of global crude oil production, and its non-OPEC allies, decided not only to maintain but also to significantly increase their planned production hikes. The group agreed to raise combined oil output by 411,000 barrels per day, nearly tripling the initial increase of 140,000 barrels per day expected for May.
This move sent oil prices plummeting by 6%. The eight key OPEC+ producers involved—Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman—cited strong oil demand later in the year as the main reason for their decision, despite growing fears of a global economic slowdown.
In their statement, OPEC+ said the production increase was a reflection of “healthy market fundamentals and a positive market outlook.” However, they also noted that these increases could be paused or reversed depending on future market conditions.
Another factor influencing OPEC’s decision may be pressure from President Trump, who has repeatedly demanded that oil-producing nations increase output to lower fuel prices in the U.S. “This is partly about appeasing Trump,” said Saul Kavonic, head of energy research at MST Marquee. “Trump has been pushing OPEC to reduce oil prices, which in turn lowers global energy prices to counteract the inflationary effects of his tariffs.”
OPEC officials have denied that their decision was influenced by Trump’s demands.
The situation also highlights ongoing compliance issues within OPEC+, as some member countries continue to produce more crude oil than their quotas allow, complicating the group’s efforts to control the global supply. RBC Capital Markets analyst Helima Croft suggested that the production increase might be an attempt to address these compliance challenges and ensure more control over market share.
- How Will OPEC React to Iran’s Request for Action Against U.S. Sanctions?
- A New Oil Cycle Starts, with Sanctions, Shale, and OPEC Shaping the Future
- Iraq Reaffirms OPEC+ Commitment Before Resuming Kurdistan Oil Exports