Goldman Sachs Revises Down 2026 Oil Price Forecast Amid Recession Risks

Recession risks and the possibility of higher-than-expected OPEC+ supply led Goldman Sachs to revise its annual average price forecasts again for Brent and West Texas Intermediate crude in 2026.

The Wall Street brokerage lowered its 2026 average price forecast for Brent by US$4 to US$58 per barrel, and for WTI to US$55, Reuters reported, citing a note dated April 6.

This revision follows a previous adjustment, where the bank had decreased its 2026 forecast for Brent to US$62 and WTI to US$59. Goldman Sachs also cautioned that these new projections could be further modified downward.

This correlates with the firm’s decision to raise the likelihood of a US recession to 45 percent within the next 12 months, up from a previous estimate of 35 percent.

The adjustment reflects growing concerns over a trade war fueled by extensive tariffs imposed by US President Donald Trump.

In the newly released note, Goldman Sachs said: “Oil prices would likely exceed our forecast if the Administration were to reverse tariffs sharply and deliver a reassuring message to markets, consumers, and businesses.”

Other investment banks have also revised their forecasts in response to intensifying trade tensions.

Goldman Sachs cited a significant tightening of financial conditions and heightened policy uncertainty, which are expected to further reduce capital spending beyond their earlier projections.

This also aligns with last week’s adjustments by several investment banks to their recession risk forecasts, including J.P. Morgan, which estimated a 60 percent chance of both a US and global recession.

Goldman Sachs now expects oil demand to grow by 300,000 barrels per day in 2025, down from its previous forecast of 600,000 bpd, and to surge by 400,000 bpd in 2026.

The brokerage firm credited the reduction in demand growth to the adverse impact of a declining gross domestic product, which more than offsets the support provided by a weaker dollar and lower oil prices.

Oil prices dropped on April 7, extending last week’s losses, as rising trade tensions between the US and China fueled concerns of a recession that could weaken demand for crude.

On April 4, China retaliated against the US tariffs imposed by Trump, implementing a series of countermeasures, including a 34 percent surcharge on all US goods and restrictions on certain rare-earth exports. Brent crude was priced at approximately US$63.87 per barrel, while WTI stood at US$60.38.

“While the uncertainty around compliance and OPEC8+ production is very large, we still assume that the four months of OPEC8+ crude increases will total around 0.7-0.8 mb/d,” the bank added in its note.