Goldman Sachs Cuts Oil-Price Forecasts Amid OPEC+'s Supply Surge

The global oil market faces a pivotal shift as Goldman Sachs revises its 2025 price forecasts sharply lower, citing escalating OPEC+ production and weakening demand dynamics. The bank now projects Brent crude to average $65 per barrel in Q2 2025, down from its earlier $95 target for end-2025, as supply surpluses and geopolitical risks dominate the outlook. This analysis underscores a critical inflection point for oil prices, with OPEC+'s strategic pivot toward market share over price stability reshaping investor expectations.

The New Supply Reality: OPEC+ Goes All-In on Volume

Goldman Sachs attributes the price cuts to a 410,000-barrel-per-day (bpd) production increase by OPEC+ in June 2025, marking the first back-to-back supply hikes since 2018. This follows a similar March 2025 boost of 411,000 bpd, signaling a deliberate strategy to unwind prior cuts. The cartel’s shift reflects three key factors:
1. Kazakhstan’s non-compliance: The nation’s modest adherence to quotas has eroded supply discipline, with OPEC+ members collectively exceeding limits by 900,000 bpd by early 2025.
2. Lower OECD inventories: April data revealed a 28 million barrel deficit in crude stocks, driven by weaker-than-expected demand and U.S. shale underperformance.
3. Saudi Arabia’s recalibration: The kingdom has abandoned its $100/bbl price target, prioritizing volume to retain market share amid fiscal pressures from megaprojects like NEOM.

These moves are expected to create a 1.8 million bpd surplus by year-end 2025, pushing Brent prices toward $58 in 2026 under Goldman’s base case.

Downside Risks: The $40s Lurk in a Weaker Demand Scenario

While the base case assumes no U.S. recession and modest OPEC+ compliance, the downside risks are stark. Goldman warns that a global economic slowdown paired with a full reversal of OPEC’s 2.2 million bpd voluntary cuts could drive Brent below $40 by late 2025. Key vulnerabilities include:
- Trade wars: U.S. tariffs or China’s slowing oil imports (down 8.3% YTD 2025) could exacerbate oversupply.
- Geopolitical volatility: Sanctions on Iran or Venezuela might temporarily lift prices, but structural imbalances remain.
- Fiscal pressures: Producers like Saudi Arabia ($78/bbl break-even) and Russia ($68/bbl) face budget risks if prices linger below $60.

Contrasting Forecasts and Investor Implications

Goldman’s outlook aligns with broader market skepticism, though competitors remain slightly bullish:
- Bloomberg consensus: $73/bbl for 2025, $71/bbl for 2026.
- J.P. Morgan: $66/bbl for 2025, $57/bbl for 2026.
- U.S. EIA: $67.87/bbl for 2025, $61.48/bbl for 2026.

Investors should prepare for prolonged volatility. Brent’s $61.29/bbl price as of late May 2025—a four-year low—reflects these concerns. Energy stocks, particularly U.S. shale firms, face pressure unless OPEC+ reverses course or demand surprises to the upside.

Conclusion: A Market in Transition

Goldman Sachs’ revised forecasts paint a bleak picture for oil bulls, with OPEC+’s supply surge and weakening demand fundamentals driving prices lower. The $65/bbl Q2 target and $58/bbl 2026 average reflect a paradigm shift toward volume over price stability. While geopolitical shocks or a China-led demand rebound could provide brief relief, the structural overhang of non-OPEC production growth (1.7 million bpd in 2025) and OPEC+ compliance risks ensures that downside scenarios loom large.

For investors, this means caution. Equity stakes in oil producers and long-term futures contracts carry elevated risk unless OPEC+ reverts to restraint—a move now seen as increasingly unlikely. The era of $100 oil may be over, and the market’s new normal could hinge on how swiftly producers adapt to a post-supercycle reality.