Goldman Sachs Predicts Sub-$60 Oil Prices In 2026

Goldman Sachs has reiterated its bearish outlook on oil prices, projecting Brent and WTI to average $56 and $52 per barrel respectively in 2026, and maintaining 2025 forecasts at $60 and $56. This revision is driven by expectations of increased non-OPEC production (excluding Russia and U.S. shale), potentially reaching 1 million barrels per day over the next two years, outpacing global demand growth; lower prices may also lead to an earlier and lower peak in U.S. shale production, possibly around 2027.

Analysis

Goldman Sachs has reaffirmed its bearish outlook on oil prices, projecting Brent crude to average $56 per barrel and West Texas Intermediate (WTI) to average $52 per barrel in 2026, while maintaining its 2025 forecasts at $60 for Brent and $56 for WTI. This continued negative sentiment, underscored by strongly negative sentiment scores (-0.7) for oil price proxies such as BNO and USO, is primarily driven by expectations of robust non-OPEC production growth, excluding Russia and U.S. shale, which is anticipated to accelerate to 1 million barrels per day (bpd) over the next two years from key producers like Brazil, Canada, Guyana, and Norway. This surge in supply is poised to meet, if not exceed, current global demand growth, also estimated at approximately 1 million bpd. Compounding this supply picture, OPEC+ is progressively unwinding its production cuts, having agreed to increase output by a cumulative 960,000 bpd over April, May, and June, which accounts for roughly 44% of its previously agreed 2.2 million bpd cuts since 2022. For U.S. shale, Goldman Sachs anticipates that the predicted lower oil prices could precipitate an earlier and lower production peak, potentially around 2027; this timeline aligns with projections from industry leaders, including the CEOs of ConocoPhillips and Occidental Petroleum, and the U.S. Energy Information Administration, which forecasts U.S. production reaching 14 million bpd in 2027 before stabilizing. Although many U.S. explorers currently benefit from hedging plans at $70-plus price levels for the next 6 to 18 months, the sustained pressure from a potential supply glut suggests a more pronounced impact on unhedged production could materialize by late 2025, next year, or early 2027, lending plausibility to Goldman Sachs' sub-$60 oil price predictions for 2026.

Key Decisions for Investors

• Investors should critically review their exposure to oil-linked assets, including oil ETFs like BNO and USO, and energy sector equities, considering portfolio adjustments or hedging strategies in light of the sustained bearish price outlook from Goldman Sachs.
• Closely monitor upcoming OPEC+ policy decisions regarding production quotas and actual output figures from key non-OPEC+ countries, as these will be crucial determinants in the development of the anticipated market surplus.