Goldman Sachs sees OPEC+ raising oil output by 0.41 mb/d in August

Goldman Sachs anticipates OPEC+ will raise oil production by 0.41 mb/d in August, citing tight spot fundamentals, resilient global activity data, and seasonal summer demand. This decision follows OPEC+'s consistent increases and aims to normalize spare capacity while disciplining U.S. shale production. While OPEC+ is expected to maintain flat production from September due to anticipated slowing global growth, Goldman Sachs maintained its cautious oil price forecast, projecting Brent crude to average $60 per barrel in 2025.

Analysis

Goldman Sachs projects an additional 0.41 million barrels per day (mb/d) production increase from the eight-country OPEC+ group in August, attributing this to prevailing tight spot oil fundamentals, resilient global economic activity, and seasonal summer demand support. This anticipated move follows OPEC+'s consistent strategy, evidenced by a 411,000 bpd increase for July—a decision that saw oil prices rebound over $1 per barrel—aimed at recapturing market share, normalizing spare capacity, and disciplining U.S. shale production. Beyond August, Goldman Sachs anticipates OPEC+ will maintain flat production levels from September, citing expectations of slowing global growth in Q3 and the ramp-up of new large-scale non-OPEC projects. Consequently, the bank reiterates its cautious oil price forecast, projecting Brent crude to average $60 per barrel and West Texas Intermediate (WTI) $56 per barrel for the remainder of 2025, with further declines to $56 for Brent and $52 for WTI in 2026. This outlook is underpinned by expectations of significant supply growth from non-U.S. shale sources, potentially leading to market surpluses of 1 mbpd in 2025 and 1.5 mbpd in 2026; a moderate upgrade to demand forecasts, driven by revised IEA Africa estimates, stronger European demand, and a softer EV outlook, offsets the impact of increased OPEC+ supply, allowing the cautious price forecast to remain unchanged, consistent with the overall moderately negative sentiment signal.

Key Decisions for Investors

• Investors should anticipate potential near-term oil price support driven by the expected OPEC+ production increase in August and current tight fundamentals, but prepare for a more bearish outlook in 2025 and 2026.
• Closely monitor upcoming OPEC+ policy decisions beyond August, global economic growth indicators, and the pace of non-OPEC supply expansion, as these are critical factors influencing Goldman Sachs' cautious long-term price forecast.
• Evaluate long-term energy sector exposures in light of Goldman Sachs' forecast for significant market surpluses and lower prices from 2025, reflecting a cautious stance and the moderately negative sentiment for oil-tracking instruments like BNO.