After economists downgraded the global GDP outlook, Goldman Sachs further cut its oil price forecast

According to the Zhitong Finance APP, Goldman Sachs recently released a research report, stating that based on the recent downward revision of global GDP expectations by its economists, including predictions of a stagnating U.S. economy, it will further lower its oil price expectations. The bank has reduced its forecast for Brent crude and WTI crude oil prices for December 2025 by $4 per barrel, to $62 per barrel and $58 per barrel, respectively. The annual average forecast prices for Brent crude and WTI crude oil in 2026 are currently $58 per barrel and $55 per barrel, which are $4-5 lower than the forward prices at Friday's close.

The impact of weakening global GDP has surpassed the support for demand from a weaker dollar and falling oil prices, leading the bank to lower its oil demand growth forecasts for 2025 and 2026 to 0.3/0.4 million barrels per day (previously about 0.6 million barrels per day). In addition to downgrading the U.S. economic outlook, the bank's economists have also revised down GDP expectations for Europe, Central and Eastern Europe, the Middle East, and Africa. Furthermore, the expectation of weakening U.S. economic growth may have spillover effects.

Given the tightening financial environment and the increasing uncertainty affecting investments, the bank's economists have lowered their year-on-year economic growth rate forecast for the U.S. in the fourth quarter of 2025 from the previous 1.0% to 0.5%. They have also raised the probability of a U.S. recession in the next 12 months from 35% to 45%, stating that if the White House implements most of the tariff policies proposed on April 9, they will adjust their forecast to reflect a recession.

However, it is worth mentioning that the revised oil price forecasts still face downside risks due to the increased risk of recession and the possibility that the supply increase from the Organization of the Petroleum Exporting Countries and its allies (OPEC+) may exceed the bank's expectations. Even so, if the government significantly reverses tariff policies and conveys reassuring signals to the market, consumers, and businesses, oil prices could be higher than predicted. Goldman Sachs stated that it will pay particular attention to whether the reciprocal tariffs targeting specific countries will fully take effect on April 9.

In light of the accumulating downside risks, despite a significant jump in implied volatility, the bank believes that its pricing remains low, and compared to other asset classes, implied volatility remains attractive. The bank stated that for oil producers, purchasing protection against further declines in oil prices remains appealing, and oil put options will be a worthwhile economic recession hedging tool for macro investors, continuing to recommend buying 2026 Brent crude oil put options and put option spreads. Additionally, the bank continues to recommend that refining companies hedge their forward refining product margins.

Furthermore, the bank noted that due to ample idle capacity, there may be a reduced willingness for OPEC to implement significant further production cuts. In a hypothetical recession scenario, for every percentage point slowdown in global economic growth, the decline in oil prices may be larger than usual