The $60 Oil Crossroads: Supply, Demand, and the Geopolitical Wild Card

The oil market is teetering at a crossroads. Goldman Sachs, one of the world's most influential banks, now forecasts Brent crude prices to average $60 per barrel by the end of 2025, a stark revision from its earlier optimism. The prediction reflects a seismic shift in global energy dynamics, driven by surging supply, weakening demand, and geopolitical risks that could either upend—or confirm—the forecast. For investors, this is no mere statistical update; it's a signal to reassess how energy plays into broader economic and strategic bets.

The Supply Surge: OPEC+, Non-OPEC, and the Paradigm Shift

The supply side is the linchpin of Goldman's bearish outlook. OPEC+ has unleashed a flood of crude, announcing its first back-to-back production hikes since 2018. In June 2025 alone, the group added 410,000 barrels per day (bpd), building on a March boost of 411,000 bpd. This marks a “paradigm shift,” as Goldman terms it: Saudi Arabia, once obsessed with propping up prices near $100, now prioritizes volume to retain market share. The result? A projected 1.8 million bpd surplus by late 2025, enough to drag prices down.

But OPEC+ isn't the only player. Non-OPEC nations like Brazil, Canada, and Norway are ramping up output, adding 1 million bpd over the next two years. Goldman warns this could outstrip global demand growth of just 300,000 bpd in 2025—a gap that will only widen as non-OPEC production accelerates. Meanwhile, U.S. shale is hedged to stay afloat at $70+ prices, but if crude stays below that threshold for too long, production could stall by 2027.

Demand's Fragile Foundation

Goldman's demand story is equally bleak. The bank slashed its 2025 oil demand growth forecast to 300,000 bpd, citing economic slowdowns and trade tensions. Emerging markets, once the engines of growth, are now battling currency crises and fiscal strains. Even China, the world's largest oil importer, faces headwinds as its economic rebound falters.

The bank also flags a 45% chance of a U.S. recession within 12 months, a development that would crush demand further. J.P. Morgan and the U.S. Energy Information Administration (EIA) agree: their 2025 forecasts ($66 and $67.87 per barrel, respectively) align with Goldman's bearish tone. The question isn't whether oversupply exists—it's whether it will deepen.

Geopolitical Risks: The $110 Spike or the Strait of Hormuz?

Here's where the story gets volatile. Goldman's base case assumes no major supply disruptions, but it acknowledges a wildcard: Iran. If Tehran blocks the Strait of Hormuz—a 52% probability, per prediction markets—Brent could spike to $110 per barrel in the short term. Such a scenario would disrupt 20% of global oil traffic, testing the resilience of OPEC+'s production strategy.

Yet Goldman downplays this risk. Major powers, including the U.S. and China, have a clear incentive to avoid a prolonged disruption. Even so, the bank notes that even a temporary closure could delay the $60 target. Conversely, if geopolitical tensions ease, prices might stabilize in the low $70s, but the oversupply narrative would still dominate.

Investment Implications: Navigating the Crossroads

For investors, the $60 forecast is both a warning and an opportunity. Energy stocks, particularly those tied to high-cost producers like Russia ($68 breakeven) and Saudi Arabia ($78), face pressure. Goldman advises caution, suggesting investors trim exposure to energy equities unless geopolitical risks materialize.

Meanwhile, traders might consider hedging with inverse oil ETFs or put options to protect against further declines. For the long term, the $60 price tag raises a critical question: Can OPEC+ sustain its production surge, or will compliance falter? A reversal in policy—or a demand rebound from China—could upend Goldman's forecast.

The Bottom Line

The $60 price tag isn't just a number; it's a reflection of an oil market in flux. Supply is winning the battle, but the war hinges on whether demand recovers and geopolitics stays calm. For now, the scales tip toward caution. Investors should treat the $60 target as a floor—and brace for the next tremor.

In this crossroads, the only certainty is uncertainty. The question isn't if oil will hit $60—it's what happens when it gets there.