Oil prices are likely to gradually decline this year as a wave of supply growth creates a surplus in the market. At the same time, geopolitical risks associated with Russia, Venezuela, and Iran will continue to fuel volatility. This was reported by Reuters, citing Goldman Sachs, writes UNN.
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The investment bank maintained its average price forecast for 2026 at $56/$52 per barrel for Brent/WTI and expects prices to reach lows of $54/$50 in Q4 at the end of the year, when inventories in OECD countries will increase.
"The growth in global oil inventories and our forecast of a 2.3 million barrels per day surplus in 2026 suggest that lower oil prices will likely be needed in 2026 to rebalance the market — to slow non-OPEC production growth and support sustained demand growth — in the absence of significant supply disruptions or OPEC production cuts," Goldman Sachs noted.
Last year, both benchmarks showed their worst annual performance since 2020 — a drop of almost 20%.
Bank analysts added that US policymakers' focus on high energy supply and relatively low oil prices would curb sustained price growth ahead of the midterms.
According to Goldman's forecast, prices should gradually begin to recover in 2027, when the market will again move into deficit due to slowing non-OPEC production and continued strong demand growth.
The investment bank expects Brent/WTI to average $58/$54 in 2027, which is $5 lower than the previous estimate. The reason is an increase in supply forecasts for 2027 in the US, Venezuela, and Russia by 0.3; 0.4; 0.5 million barrels per day, respectively.