Goldman Sachs expects Brent to decline to low $50s by late 2026

Goldman Sachs forecasts Brent crude futures to decline to the low $50s per barrel by late 2026, driven by an anticipated oil surplus averaging 1.8 million barrels per day through 2025-2026. This surplus is projected to increase global stocks by 800 million barrels, largely due to rising OECD inventories and reduced demand. However, the bank notes that accelerated growth in Chinese oil stock could push the 2026 Brent average up by $6 to $62.

Analysis

Goldman Sachs has issued a long-term bearish forecast for Brent crude, projecting prices will decline to the low $50s per barrel by late 2026. This outlook is predicated on the emergence of a significant oil surplus, which the bank expects to average 1.8 million barrels per day between the fourth quarter of 2025 and the end of 2026. The cumulative effect of this surplus is forecasted to be a nearly 800 million barrel increase in global oil stocks. A key driver of this trend is an anticipated 270 million barrel inventory build within OECD countries, compounded by reduced demand in the region, which would lower Brent's fair value from its current mid-$70s level. The bank's model suggests that while Brent prices may track forward contracts through 2025, they are expected to fall below those contracts in 2026 as the OECD stock build accelerates. However, the forecast includes a material upside risk: should Chinese inventory growth accelerate from 0.4 to 0.8 million barrels per day, it could lift the 2026 Brent average by $6 to $62 per barrel.

Key Decisions for Investors

• Given the long-term bearish forecast, investors should re-evaluate exposure to oil-price-sensitive assets, potentially reducing positions in energy producers that would be negatively impacted by a sustained price decline into 2026.
• Consider establishing hedges against downside price risk in crude oil for the 2026 period, as Goldman Sachs' forecast suggests spot prices will fall below the levels currently indicated by forward contracts.
• Monitor Chinese oil import and inventory data closely, as accelerated stockpiling represents the primary identified upside risk that could counter the baseline bearish thesis and lift the 2026 price forecast to $62 per barrel.