The tariff-sparked market sell-off hasn’t spared oil, and analysts at Goldman Sachs see prices heading even lower if the global economy tips into a recession.
This week, Goldman Sachs analysts lowered their forecast for Brent (BZ=F) to an average of $62 per barrel in 2025 and $58 for WTI (CL=F) under the assumption that Trump’s tariffs will be reduced, the US avoids a recession, and OPEC raises supply only modestly in the months following its May increase.
But if tariffs remain as high as initially announced and a recession follows, prices could head into the $50 range by year-end.
“Assuming a typical US recession and our OPEC baseline, we estimate that Brent would decline to $58/50 by Dec25/26, respectively,” Yulia Zhestkova Grigsby, vice president of commodities research at Goldman Sachs, wrote in a note to clients on Monday night.
“In a global GDP slowdown scenario and keeping our OPEC baseline unchanged, we estimate that Brent would decline to $54/45 by Dec25/26,” she added.
In the rare but most severe possible scenario, Goldman sees a case for Brent falling below $40.
As of 10:40:46 PM EDT. Market Open.
CL=F BZ=F
“Finally, 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/bbl in late 2026,” Grigsby said.
On Tuesday, crude bounced back more than 1%, with West Texas Intermediate futures hovering above $61 per barrel. Brent, the international benchmark, also rose above $65 per barrel.
The rebound follows a 13% drop over the last three sessions as traders assessed the impact of a global trade war following President Trump’s sweeping tariff announcement last week. Concerns about excess supply after the Organization of Petroleum Exporting Countries and its allies agreed to increase output in May also weighed on prices.
Most Wall Street analysts agree that should the sweeping tariff plan announced on April 2 take effect and remain in place or escalate, the likelihood of a recession is high.
“The tariffs, if they stay in place, would be a big hit to the US and global growth, likely pushing the US and global economy into recession this year,” JPMorgan’s Natasha Kaneva and her team wrote last Friday.
“Still, while it is currently difficult to predict the overall direction of developments, we believe that, for oil prices, the trajectory is unmistakably one-way,” she added.
The analysts believe supply-demand fundamentals may help the Trump administration in achieving its goal of lower oil prices.
