Goldman Sachs raises Brent oil forecast for second half of 2025 to $66

Goldman Sachs has raised its Brent oil price forecast for H2 2025 to $66/barrel (up $5) and WTI to $63/barrel (up $6), citing increased risks of supply disruption, lower OECD inventories, and Russian production constraints. While 2026 forecasts remain unchanged at $56 for Brent despite a wider projected surplus, the bank highlights significant price volatility potential, from $90 on Iranian supply disruptions to $40 in a recession scenario with full OPEC+ unwinding. Goldman maintains a bullish long-term outlook post-2026 due to falling investment but advises investors to hedge against 2026 downside risk via put spreads and selling calls.

Analysis

Goldman Sachs has revised its oil price forecast upwards for the second half of 2025, projecting Brent crude to average $66 per barrel (a $5 increase) and WTI at $63 (a $6 increase). This adjustment is attributed to heightened supply disruption risks, declining inventories in OECD nations, and production constraints in Russia. Despite this near-term bullishness, the bank's 2026 forecast remains unchanged at $56 for Brent, factoring in a wider projected supply surplus of 1.7 million barrels per day which offsets the boost from higher long-dated prices. The report highlights significant potential for price volatility, outlining a range of outcomes from $90 Brent in the event of an Iranian supply disruption to as low as $40 in a 2026 recession scenario involving a full unwinding of OPEC+ cuts. While Goldman maintains a cautious stance for 2026, it holds a bullish long-term view for the period beyond 2026, citing falling investment, a lack of new non-OPEC projects, and growing demand as factors that will reduce spare capacity and support prices.

Key Decisions for Investors

• Investors may consider tactical long exposure through H2 2025 to align with the upgraded price forecasts, but should recognize the significant downside risk and increased surplus projected for 2026.
• Given the wide range of potential outcomes for 2026, including a downside scenario to $40, it is prudent to implement downside protection strategies, such as purchasing put spreads, to hedge against a potential price collapse.
• Monitor OPEC+ production decisions closely, particularly any unwinding of the 1.65 mbpd voluntary cuts, as well as geopolitical developments related to Iranian supply, as these are identified as primary catalysts for significant price swings.
• For investors with a longer-term horizon, any significant price weakness in 2026 could represent a strategic entry point, aligning with the bullish outlook for the post-2026 period driven by structural underinvestment in non-OPEC supply.