Goldman Sachs has revised its oil price forecasts due to rising trade tariffs and a slight increase in supply from OPEC+ producers. For 2025, Brent crude is expected to average $69 per barrel and WTI at $66, with further reductions anticipated to $62 and $59 in 2026.
Additionally, Goldman has reduced its December 2025 forecasts for Brent and WTI by $5 to $66 and $62, respectively. The bank noted that the risks to these projections are mainly downward, influenced by global economic challenges and geopolitical uncertainty impacting demand expectations.
Barclays Adjustments
Barclays has also adjusted its outlook for Brent crude in light of trade tensions, reducing its forecast from $74.
These price revisions from the two institutions reflect a growing concern over both the supply-demand balance and a general cooling of global growth conditions. Rising tariffs temper international trade, reducing industrial activity, and by extension, the appetite for energy. At the same time, marginal increases in production—particularly from known exporters within OPEC+—contribute to a looser market. When looking ahead, this points us toward a less optimistic environment for oil-linked contract pricing.
Barclays’ decision to scale back its Brent crude forecast reflects a parallel narrative. By pulling guidance down from previously higher expectations, they’ve aligned more closely with the idea that buying momentum could become harder to sustain over coming quarters. With both institutions responding to the same set of variables—namely shifting trade patterns, mild oversupply, and less supportive macroeconomic conditions—it becomes clear that sentiment is waning slightly.
We needn’t focus solely on spot values. The real story lies in what forward curves are beginning to suggest. Current downward revisions for 2025 and 2026 highlight a re-rating of risk premiums previously built into long-term contracts. As demand forecasts are adjusted lower, those premiums can no longer be justified to the same extent.
Trading Perspective
From a trading perspective, it suggests that further long exposure—particularly in options tied to higher strike thresholds—may need to be reassessed. In previous quarters, path dependency was more heavily influenced by directional sentiment, and while that’s still relevant, there’s a shift underway where volatility elements could become more dominant in premium pricing. That means option writers, in particular, might need to think twice before extending duration or increasing size.
This kind of realignment often leads to flatter curves, especially if the spot market remains subdued while back months draw less buying enthusiasm. For products tied to rolling futures positions, that introduces clear risks—offsetting yield expectations if carry becomes negative. Those with system-driven models would do well to reweight parameters that overly favour backwardation.
It’s also worth noting that geopolitical risks—though always present—are not being assigned the same upside influence they once were. The institutions cited here don’t expect those tensions to trigger sharp upward moves unless coupled with actual supply disruption. Forecasts have grown more defensive, partly because attempts to measure precautionary demand are yielding reduced signals.
In effect, what we’re seeing is a reassessment of the lower boundary—not a complete breakdown of structural support, but rather a narrowing range from which prices are expected to move. That restrains runaway bullish scenarios and increases the likelihood that mean-reversion strategies may dominate positioning.
Given how relatively modest the changes in production are, it’s clear that sentiment around consumption is doing most of the heavy lifting. If that continues, spreads linked to refining margins and inter-month volatility could remain compressed. Supply dynamics may still swing day-to-day, but the more important drivers appear to be sitting within the broader economic narrative.
Thanks to this shift in tone from both analysts, traders would need to rethink how absolutist their forward views really are. Embracing a less binary, more distributional approach might serve us better in the coming weeks. Especially where risk tolerances are finely tuned to policy surprises or commodity-linked hedging flows, recalibrating those sensitivities seems warranted.
Though no one has put a cap on how low things could go, it’s clear that the upside now has more hurdles to clear. And for once, that might not be the domain of OPEC+ alone, but a broader story where demand keeps doing the deciding.
