Goldman Sachs stated that oil prices may face challenges in the coming years.
The company's commodity analysts stated that if President Trump implements his tariff proposals, or if OPEC+ increases production in the next year, Brent crude prices could fall to just above $60 per barrel by the end of 2026.
This forecast implies a decline of about 20% in Brent crude from current prices, falling approximately 25% from this year's average of around $80 per barrel. This year, oil prices have already felt downward pressure due to increased supply and modest demand growth.
Analysts stated in a report last Thursday: "(Brent crude) medium-term price risks are skewed to the downside due to high spare capacity and widespread tariffs that could harm demand."
This analysis was presented in the context of Trump proposing tariffs of 10%-20% on all countries and a 60% tariff on Chinese goods.
Others on Wall Street also warned of downside risks to oil prices due to Trump's potential tariffs. Last week, Bank of America strategist Francisco Blanch stated that Trump's proposed tariff policy is likely to suppress global trade and trigger a trade war, weakening demand and prices.
Blanch said in an interview: "America First means goods second."
Trump's more relaxed regulatory stance and support for fossil fuels could also increase supply by raising production, posing further downside risks to prices.
During the campaign, Trump promised to lower energy prices by increasing oil production. U.S. oil production has reached historical highs, hitting a record daily output of 13.4 million barrels in August.
However, Goldman Sachs analysts stated that oil prices have some upside potential in the short term.
A team of analysts led by Daan Struyven predicts that if Iranian oil supplies decrease, Brent crude prices will rise to $83 by mid-2025. Subsequently, prices will return to an average of $76 per year due to a moderate surplus.
Analysts said: "This moderate price increase reflects our forecast that the price uplift from undervaluation reversal and U.S.-China strategic stockpiling will outweigh the drag caused by moderate surplus."
They also pointed to an acceleration in global demand growth next year, including an increase in crude oil demand in both China and the United States.
Nevertheless, other forecasters warn that a larger surplus may occur next year. Earlier this month, the International Energy Agency stated in a report that due to weak demand in Asia and rising production from non-OPEC countries, the oil market may face a surplus of 1 million barrels per day next year.
Article reposted from: Jin Shi Data