After economists lowered the global GDP outlook, Goldman Sachs again cuts its oil price expectations.

Goldman Sachs recently released a research report based on the expectations of the bank's economists for a global GDP downgrade in the past few days, including predictions of stagnation in the US economy, further lowering oil price expectations. The bank has lowered its forecast price per barrel of Brent crude oil and WTI crude oil for December 2025 by $4 each, to $62 and $58 per barrel, respectively. The annual average forecast prices for Brent crude oil and WTI crude oil in 2026 are currently $58 and $55 per barrel, respectively, lower by $4-5 per barrel than the forward prices at the close of last Friday. Due to the impact of weakened global GDP outweighing the support of a weaker dollar and lower oil prices on demand, the bank has revised down its forecasts for oil demand growth in 2025 and 2026 to 0.3/0.4 million barrels per day (previously about 0.6 million barrels per day). In addition to downgrading the outlook for the US economy, the bank's economists have also lowered GDP expectations for Europe, Central and Eastern Europe, the Middle East, and Africa. Furthermore, expectations of weakened US economic growth may have spillover effects. Considering the tightening financial environment and the increasing uncertainty affecting investments, the bank's economists have lowered their forecast for the year-on-year economic growth rate for the fourth quarter of 2025 in the US from the previous 1.0% to 0.5%. They have also raised the probability of a US economic recession in the next 12 months from 35% to 45%, and stated that if the White House implements most of the tariff policies proposed on April 9, they will adjust their forecast to reflect an economic recession. However, it is worth noting that the bank's revised oil price forecasts still face downside risks, as the risk of an economic recession further increases, and the supply increase from the Organization of the Petroleum Exporting Countries and its allies (OPEC+) may exceed the bank's expectations. Nevertheless, if the government significantly reverses tariff policies and sends calming signals to the market, consumers, and businesses, oil prices may exceed the forecast. Goldman Sachs stated that it will pay particular attention to whether retaliatory tariffs against specific countries will be fully implemented on April 9. Considering the accumulating downside risks, despite a significant surge in implied volatility, the bank believes that its pricing is still low, and compared to other asset classes, implied volatility remains attractive. The bank stated that for oil producers, purchasing protective measures against further oil price declines remains attractive, and buying put options on oil is a worthwhile hedge tool for macro investors. They continue to recommend buying put options for Brent crude oil in 2026 and put option spreads. In addition, the bank continues to recommend refineries to hedge forward refined product profits. Furthermore, the bank stated that due to ample spare capacity, OPEC may be less willing to significantly reduce production further. In the assumed scenario of an economic recession, for every one percentage point slowdown in global economic growth, the decline in oil prices may be even greater than usual.