Global slowdown could drive oil prices below $40 - Goldman Sachs
By Abigail Townsend
Date: Tuesday 08 Apr 2025
(Sharecast News) - Oil prices could tumble to less than $40 a barrel, Goldman Sachs warned on Tuesday, on the back of a slowing global economy and output hikes.
Having topped $82 a barrel in mid-January, benchmark Brent crude has since plunged and is now trading at $64.45.
As well as mounting fears of a global economic slowdown, on the back of Donald Trump's sweeping tariff regime and subsequent market chaos, Opec and its allies last week agreed to boost supply by more than expected next month.
The oil cartel was expected to continue gradually unwinding recent supply cuts but the size of May's increase shocked markets.
Opec+ cited the "positive market outlook" for the decision. But analysts also pointed to the organisation taking a stricter approach to compliance, after some members did not cut output earlier this year as agreed.
In a note discussing the future for oil prices, Goldman Sachs said it expected Brent to remain under pressure, hitting $62 by the of this year and $55 by the end of 2026.
WTI was forecast to reach $58 in December before falling further to reach $51 by the end 2026.
The Wall Street bank based its forecasts on two assumptions: that the US avoids a recession, and Opec+ supply rises are only moderate.
But it warned oil prices would fall significantly further should those assumptions not pan out.
In particular, it said a US recession and greater supply rises could see Brent fall to $58/$50 by December 2025/26 respectively, while a slowdown in global GDP could drive Brent down to just under $40 a barrel in late 2026.
Brent last traded at $40 in 2020, during the early months of the pandemic.
However, Goldman Sachs acknowledged that its worst-case scenario - which would also include a full unwind of Opec cuts - was "more extreme and less likely".
It also did not expect oil prices to fall well below $40 on a sustained basis. "First, US shall offers an increasingly firmer floor at lower prices," it argued. "Second, a potential 2025 US recession is unlikely to be very deep, in part given a lack of major financial imbalances in the private sector."
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