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

Goldman Sachs forecasts Brent crude futures will decline to the low $50s a barrel by late 2026, driven by an anticipated oil surplus averaging 1.8 million barrels per day from Q4 2025 through Q4 2026, which is expected to increase global stocks by 800 million barrels. This projection, stemming from rising OECD inventories and reduced demand, implies a significant drop from current mid-$70s levels, though accelerated Chinese stock growth could temper the decline, potentially raising the 2026 average to $62.

Analysis

Goldman Sachs has issued a bearish forecast for Brent crude, projecting a 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 estimates will average 1.8 million barrels per day from Q4 2025 through Q4 2026. This imbalance is expected to drive a substantial increase in global stocks by nearly 800 million barrels by the end of 2026. A key driver of this scenario is the combination of rising inventories within OECD countries, which are forecast to account for 270 million barrels of the total build, and reduced demand from these same nations. While the bank expects Brent prices to track forward contracts through 2025, it anticipates prices will fall below the forward curve in 2026 as the stock build accelerates. A potential mitigating factor is Chinese inventory growth; if it accelerates from 0.4 to 0.8 million barrels per day, it could raise the 2026 Brent average by $6 per barrel to $62.

Key Decisions for Investors

• Given the medium-term bearish forecast for crude oil, investors with long exposure to energy assets should consider hedging strategies or reducing positions correlated with oil prices for the 2026 timeframe.
• Monitor Chinese crude oil stockpiling data closely, as an acceleration to 0.8 million barrels per day is the primary identified upside risk that could moderate the projected price decline.
• Pay attention to the Brent futures curve structure, as the forecast for spot prices to drop below forward prices in 2026 implies a deepening contango, which would negatively impact roll yields for long-only commodity investors.