Photo caption: Oil price decline
Goldman Sachs has slashed its oil price forecast for a third time in one month after OPEC+ decided this weekend to hike production in June with a similar 410,000-bpd increase it is implementing in May.
In an online meeting on Saturday, key OPEC+ producers led by Saudi Arabia and Russia agreed to raise collective output by 411,000 barrels per day (bpd), nearly triple the volume originally scheduled.
The move follows a similar surge announced for May and signals a sharp reversal from OPEC+ efforts to defend oil prices.
Following the announcement of another aggressive production hike, Goldman Sachs cut – again – its average oil price forecasts this year and next.
Goldman’s analysts now see Brent Crude prices averaging $60 per barrel this year, down from a previous forecast of $63 a barrel. The average price of the U.S. benchmark, WTI Crude, was now downgraded at Goldman Sachs to $56 for 2025, down from $59 a barrel previously expected.
Next year, Brent is set to average $56 a barrel, down from $58, and WTI is expected at $52, down from $55 per barrel in the previous forecast from mid-April.
The key reason for the downgrade was the OPEC+ group’s decision to return more barrels to the market despite the uncertainties about economies and demand in the tariff wars and spats.
“Saturday’s decision increases our confidence that the new baseline size of production increases is likely 0.41mb/d,” Goldman Sachs’ strategists wrote in a note carried by Investing.com.
“The decision likely reflects relatively low inventories and a broader shift to a more long-run equilibrium focused on supporting internal cohesion and on strategically disciplining U.S. shale supply,” the investment bank’s strategists said.
According to Warren Patterson, Head of Commodities strategy at ING, the more aggressive supply hikes from OPEC+ mean that the oil surplus will be brought forward, leaving the market in surplus throughout 2025.
Weighed down by the prospect of higher-than-expected OPEC+ output and a market surplus, oil prices were down by 2% in Asian trading on Monday, with Brent dipping below the $60 per barrel mark.
=== Oilprice.com ===
