Goldman Sachs has warned that Brent crude prices could fall below $40 per barrel in an extreme downside scenario triggered by a global economic slowdown and a full reversal of OPEC+ production cuts.
This projection follows a week in which the bank cut its oil forecasts twice amid rising geopolitical and market pressures.
In a note titled How Low Could Oil Prices Go? dated April 7, analysts led by Yulia Grigsby outlined a worst-case scenario in which escalating trade tensions, a recession and supply pressures could drive Brent to levels not seen since the early stages of the pandemic.
“In a more extreme and less likely scenario with both a global GDP slowdown and a full unwind of OPEC+ cuts which would discipline non-OPEC supply we estimate that Brent would fall just under $40 a barrel in late 2026” the note stated.
However, Goldman clarified that this does not represent its base-case forecast which currently sees Brent averaging $55 per barrel by December 2025.
The global oil market has come under renewed pressure in recent sessions as the Trump administration’s aggressive trade stance, especially against China, has triggered recession fears and dampened energy demand expectations.
The potential economic fallout from heightened tariffs combined with increased supply from OPEC+ producers has created a bearish outlook for oil prices.
Brent crude was last quoted at $63.90 a barrel after touching a four-year low earlier in the week.
Analysts attribute the sharp decline to a combination of macroeconomic headwinds and an unexpected increase in production from oil-exporting countries.
OPEC+, which had previously maintained tight supply discipline, has begun adding more barrels than expected to the market reversing a long-standing policy of restraint.
This has contributed to a growing supply glut at a time when global demand is being threatened by weakening economic indicators and trade uncertainty.
Alongside Goldman Sachs, other major institutions, including Morgan Stanley and Societe Generale, have revised their base-case oil forecasts downward while also exploring a range of bullish and bearish scenarios based on evolving global conditions.
Goldman’s updated baseline assumes a typical U.S. recession and stable supply conditions under which Brent is projected to average $58 per barrel by December 2025 and $50 by December 2026.
The bank’s outlook reflects a cautious stance as policymakers and market participants assess the long-term implications of trade policies on global demand.
The combination of policy-driven demand shocks and shifting production strategies among oil exporters has left investors wary of sustained price stability in the crude market.
Commodity analysts believe that without a coordinated response from OPEC+ or signs of easing trade tensions, oil prices could remain under prolonged pressure.
The energy sector continues to monitor signals from the U.S. administration and global producers as market participants brace for further volatility.
The return of supply-side risks, coupled with weakening demand dynamics, may force oil-dependent economies and companies to re-evaluate budget projections and hedging strategies.
With Brent already down sharply and broader equity markets facing turbulence from the trade war, Goldman’s projections underline the uncertainty facing global energy markets in 2025 and beyond.
