Goldman cuts oil forecasts as recession risk rises with Trump tariffs
Goldman Sachs has lowered its forecast of US crude oil prices as investment banks see a slowdown in the US economy and increased risk of a recession caused by President Donald Trump’s tariffs. On Sunday, Goldman reduced its outlook for US crude and global benchmark Brent to $58 and $62, respectively, in December 2025. The bank said US crude and Brent are expected to see prices drop even further, averaged $55 and $58. “The risk of a decline in crude oil price forecasts remains on the downside as OPEC+ supply could potentially increase more than we expect as the recession risk is on the downside,” a product analyst led by Daan Struyven told clients in a memo. Goldman economists have reduced US economic growth forecasts from half to 0.5% from the previous 1%. The banks now see a 45% chance that the economy will sign for the next 12 months, and economists have warned that if Trump implements most of his tariffs on April 9, it will change its forecast to a recession. The decision by key OPEC+ members to accelerate production growth is putting even more pressure on prices. Trump touted oil prices as a victory Monday in his fight against inflation, but the sharp decline could indicate a recession and undermine the administration’s target to promote production at the US recession signal. According to Martijn Rats, a product strategist at Morgan Stanley, the decline in size could be a precursor to a slump. Brent booked only 24 times in two days since the contract began trading in the summer of 1988, 22 of which were in recession, Ratt told clients in a note on Monday. Morgan Stanley now predicts that Brent will fall to $62.50 per barrel by the third quarter, when it fell from the previous $67.50. Bank of America believes that the rise in oil demand this year has been halved due to Trump’s tariffs, just as OPEC+ is bringing oil back to a fragile market. According to the bank, this could lead to 1.25 million barrels of “eye-away” surplus per day. “If this is a scenario that really unfolds, we believe there is room for oil prices and the stock value of the Oil Labour to fall,” an analyst led by Kalei Akaamine told clients in a memo on Monday. US production could potentially reduce US shale production at current price levels. According to the latest Dallas Fed Energy Survey, producers are on average looking for West Texas intermediate prices at an average of $65 per barrel, with an average of $65 per barrel. US crude was trading at less than $61 per barrel Monday morning. Goldman has already cut its US shale supply forecast. Investment banks believe that U.S. oil production in the Continental 48 states has fallen to 11.3 million bpd by December 2026 from a peak of 11.4 million bpd in March 2025. Goldman previously expected production to grow to 11.9 million bpd. “Purchase additional downside protections against prices remains attractive to oil producers, and oil puts remain an attractive recession hedge for macro investors,” Struyven said. “We also continue to recommend postponing product margins that have deferred refiners’ hedges.” Oil executives had angered criticism of Trump’s tariffs in anonymous response to the Dallas Fed’s first quarter survey. Several executives said steel tariffs are facing rising costs and that production should be cut if the White House succeeds in dramatically lowering oil prices. “The administration’s threat to oil prices of $50 has reduced our capital expenditures in 2025 and 2026,” the executive said. “The ‘drill, baby, drill’ won’t work at $50 per barrel oil. Rigs will decline, employment in the oil industry will decrease, and US oil production will decrease during COVID-19. “Wal Street is generally seeing risks on the downsides, but consulting firm Ricestad Energy “hopefully the recent price slides will be mitigated by the expected summer demand and ongoing geopolitical risks,” said Mukesh Sadev, the group’s global commodity market head, in a memo on Friday. “The potential supply destruction caused by sanctions and tariffs on both sellers and buyers makes OIL prices unlikely to fall below $70 for a long time,” Sahdev said. Get tickets for Pro Live Join us on the New York Stock Exchange! An uncertain market? Earn Edge with CNBC Pro Live, the first exclusive event on the historic New York Stock Exchange. Access to expert insights is paramount in today’s dynamic financial situation. As a CNBC Pro subscriber, we recommend attending the first exclusive and in-person CNBC Pro live event held at the iconic NYSE on Thursday, June 12th. You will also get the opportunity to network with CNBC experts, talent and other pro subscribers during exciting cocktail hours on the legendary trading floor. Tickets are limited!
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