Investment banking giant Goldman Sachs has updated its global oil demand predictions while maintaining existing price forecasts for major crude benchmarks, despite current market prices trading above projected levels.
The firm’s latest analysis shows an increased expectation for oil demand growth, projecting a rise of 600,000 barrels per day in the current year, followed by 400,000 barrels daily growth in 2026. Despite this upward revision in demand outlook, Goldman’s price targets remain unchanged at $60 per barrel for Brent crude and $56 for West Texas Intermediate (WTI) this year, even as both benchmarks currently trade significantly higher, with Brent exceeding $65 and WTI above $62 per barrel.
Looking ahead to next year, the bank’s analysts anticipate further price declines, forecasting Brent crude at $56 and WTI at $52 per barrel. This bearish outlook is largely influenced by developments in U.S.-Iran diplomatic relations, as recent discussions have indicated potential progress toward a nuclear agreement. President Trump’s recent announcement regarding the proximity to reaching a deal initially impacted oil prices negatively, though subsequent updates revealed ongoing disagreements between the parties regarding uranium enrichment conditions.
The market outlook is being shaped by two competing forces: the prospect of Iranian oil returning to global markets and the evolution of international trade tensions. While a potential U.S.-Iran deal could increase global oil supply, potentially pushing prices lower, improvements in the tariff war situation have brightened economic growth prospects, which could help maintain robust oil demand.
Goldman’s analysts note that reduced trade tensions and resulting higher GDP projections were key factors in their decision to revise demand forecasts upward for the latter half of the year. However, they also warn of potential downside risks, particularly in a scenario where trade conflicts persist and begin to materially impact global economic growth.
In their most bearish scenario, the bank’s analysts suggest Brent crude could fall as low as $40 per barrel by late 2026. This projection assumes both a continuation of trade tensions and a decision by OPEC+ to reverse its 2022 production cuts, returning previously withheld supply to the market.
The interplay between geopolitical factors and market fundamentals continues to create significant uncertainty in oil price forecasts. The potential outcomes of U.S.-Iran negotiations remain particularly crucial, with Iran’s stance on uranium enrichment activities representing a major sticking point. The Iranian side maintains these activities are non-negotiable, while U.S. negotiators insist on their cessation as a condition for any agreement.
The analysis demonstrates the complex balance between supply-side factors, such as potential Iranian oil exports and OPEC+ production decisions, and demand-side influences, including global economic growth prospects and trade relations. While Goldman’s revised demand outlook reflects improved economic conditions, their maintained price targets and downside scenarios suggest continued caution regarding longer-term market dynamics.
This perspective comes at a time when oil markets are navigating multiple uncertainties, from geopolitical tensions to economic policy shifts, making price forecasting particularly challenging. The divergence between current market prices and Goldman’s projections highlights the ongoing debate about oil’s future trajectory among market participants and analysts.