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Goldman Sachs cut its price outlook for oil (CL=F, BZ=F). Morning Brief Anchors Brad Smith and Madison Mills explain why in the video above.
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Goldman Sachs lowered its oil price forecasts over the weekend, citing a shift in focus to softer US growth from downside risk to Russia and Iran. Analysts now see oil at $71 a barrel by December 2025 and $68 a barrel in 2026 here. Analysts writing, the decision reflects two major changes here. First, weaker oil demand as US growth slows, a result of higher tariffs. And the second, higher OPEC plus supply here as well. And as we were taking a look at oil prices, I believe we had WTI up on the screen a moment ago. We got them both for you here. And you can see where oil prices sit right now or Brent is just above $70.
I think what's important for the call obviously beyond anyone who is an investor in these commodities in particular, but is what's driving the downward, the downgrade here when it comes to the price of oil, and it's specifically a expectation of softness in US GDP. So if you think that there's softness in US GDP that's going to weigh on oil moving forward, what does that mean not only for Goldman's forecast on oil, but for their forecast for the US economy? They talk about rising risks to demand, reinforcing their views that refiners need to be hedging as they could see margin pressure, that also means maybe consumers need to be hedging against pressure on their own profit margins at home because they see a slowdown in US economic growth. And I think that's something that we're going to continue to see calls on for multiple assets, multiple forms of commodities moving forward.
There's going to be major geopolitical implication with this too here, especially as you consider some of the ongoing negotiations and energy sanctions here. They do note that they're anticipating and expecting prices to recover modestly in coming months, as they assume more resilient GDP growth than priced, as you were mentioning a moment ago, but a recovery and valuation and no easing in Russian energy sanctions that particularly noteworthy, as well as the additive of incorporating supply beats from the exempt OPEC producers, Libya and Iran most notably there. So, uh it's going to come back down to how those major entities are increasing their production and thus impacting some of the price action as well.
Yeah, I think it's a really great breakdown and just the degree of factors that are weighing on oil moving the commodity.