Goldman Sachs Lowers Oil Price Forecasts: What Does It Mean for You and the World?
In a recent note, Goldman Sachs, one of the world’s leading investment banks, lowered its December 2025 and average 2026 forecasts for Brent and WTI crude oil prices. The bank cited slower oil demand growth prospects and expectations of higher OPEC+ supply as the reasons for this revision.
Slower Oil Demand Growth Prospects
The International Energy Agency (IEA) and the U.S. Energy Information Administration (EIA) have both projected a decrease in oil demand growth for 2022. The IEA expects an increase of only 1.2 million barrels per day (bpd), while the EIA anticipates a growth of 1.4 million bpd. This is significantly lower than the 2.2 million bpd growth rate recorded in 2019.
Goldman Sachs believes that this trend will continue, with oil demand growing at an average rate of 1.3 million bpd from 2022 to 2026. This slower growth rate is due to several factors, including the ongoing energy transition towards renewable energy sources, increased electric vehicle adoption, and economic headwinds.
Higher OPEC+ Supply
OPEC+, the Organization of the Petroleum Exporting Countries and its allies, have been implementing production cuts since 2017 to support oil prices. However, they have been gradually increasing production since April 2021, with plans to add 400,000 bpd each month. Goldman Sachs expects OPEC+ to continue increasing production in the coming months, which will put downward pressure on prices.
What Does This Mean for You?
For consumers, lower oil prices could lead to cheaper gasoline and diesel prices at the pump. This could result in savings for individuals and businesses, particularly those that rely heavily on transportation. However, lower oil prices could also lead to lower profits for oil and gas companies, which could negatively impact their stock prices and employee jobs.
What Does This Mean for the World?
Lower oil prices could have significant economic implications for oil-producing countries, particularly those that rely heavily on oil exports for revenue. For example, Russia and Saudi Arabia both derive over half of their export revenues from oil and gas. Lower oil prices could lead to budget deficits and currency devaluation, which could have ripple effects on the global economy.
Additionally, lower oil prices could accelerate the energy transition towards renewable energy sources. Renewable energy sources, such as wind and solar, have become increasingly cost-competitive with fossil fuels in recent years. Lower oil prices could make renewable energy even more attractive, leading to increased investment and deployment.
Conclusion
Goldman Sachs’ lowered oil price forecasts are a reflection of slower oil demand growth prospects and expectations of higher OPEC+ supply. For consumers, this could mean cheaper gasoline and diesel prices. However, for oil and gas companies and oil-producing countries, lower oil prices could lead to lower profits and economic challenges. The energy transition towards renewable energy sources is likely to accelerate as a result.
- Goldman Sachs lowers Brent and WTI crude oil price forecasts
- Slower oil demand growth prospects cited as reason
- Higher OPEC+ supply also expected to impact prices
- What this means for consumers and the world
- Cheaper gasoline and diesel prices for consumers
- Lower profits for oil and gas companies and oil-producing countries
- Acceleration of the energy transition towards renewable energy sources
