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US President Donald Trump's tariffs combined with OPEC+ planned supply increases have dragged oil prices (CL=F, BZ=F) down to multiyear lows. Goldman Sachs managing director and head of oil research Daan Struyven recently cut his forecast for oil prices. Find out his new call in the video above.
To watch more expert insights and analysis on the latest market action, check out more Market Domination here.
All right, let's take a look at oil prices. We had WTI down about 6% today, Brent crude prices off about 5%. A number of different problems here for the oil market: Trump's tariff plans, China's retaliatory tariffs, and then yesterday's production announcement from OPEC Plus. All of that adding up to a tough situation here in the oil markets. Joining us now to discuss is Goldman Sachs's co-head of global commodities research and head of oil research, Damien Courvalin. Don, thanks so much for stopping by. Let's just start with your team's forecast, which you revised yesterday. What you're expecting now to see in terms of pricing in the market this year and on into the future?
Yeah, thanks a lot for having me. So we did downgrade our oil price forecast by $5 per barrel yesterday because the two downside risks to prices that we have been flagging are realizing. Uh, both, uh, a weaker demand outlook on the back of tariff escalation. And then on the supply side, somewhat higher supply, uh, from, from OPEC. Uh, and so we now expect, uh, Brent prices this year in the mid- to high 60s, pretty close to current levels. TI this year in the low 60s. And then actually, uh, for next year, we look for some additional declines with Brent in the low 60s and TI, uh, in the high 50s. And the risk, uh, to this reduced price forecast are still skewed to the downside because recession risk is, uh, is elevated.
So if this is primarily driven by decisions, uh, in Washington D.C. and the White House, does the White House, what levers does the White House have, particularly the strategic petroleum reserve and filling that up? Or where do we stand with that? Can that move this needle at all?
Um, the White House does influence oil prices through, to various channels. I would point to, on the demand side, the impact on the economic outlook via tariffs or, or policies, you know, that may be positive or negative for, for the outlook. On the supply side, uh, we do think that the White House does influence the level of inventories via strategic reserve patrol strategic reserve purchase.
I couldn't say it either. A good, that's SPR purchases.
Yes. But, um, that tends to be a fairly, uh, slow process to refill, and it doesn't tend to boost prices quickly when it happens. However, when prices rise to extremely elevated levels, the release of barrels, which tends to soften prices, tends to be, tends to be more impactful and quick. But the speed is asymmetric. And so in our view, the key channel here really through which US economic policy is influencing the oil price outlook is primarily through the demand side.
