Goldman Sachs expects Brent crude prices to decline to around $50 per barrel by the end of 2026, driven by a significant increase in the oil supply surplus in the coming years. The bank’s estimates suggest the surplus could average 1.8 million barrels per day from Q4 2025 to Q4 2026, meaning an increase of around 800 million barrels in global inventories by the end of the period.
It is expected that countries in the Organisation for Economic Co-operation and Development (OECD) will account for about a third of total global inventories, or 270 million barrels by 2026. With a slowdown in demand expected from these countries, the bank forecasts that the fair value of Brent crude will decline from its current mid-$70s levels. As inventories rise and demand slows, prices could remain at lower levels in the medium term.
According to Goldman Sachs, Brent prices are likely to remain close to futures contract levels throughout 2025, but they may see a sharp decline in 2026 as the global inventory buildup accelerates. The markets are assessing the dual pressures of increased supply and slowing demand, with expectations that prices will remain within a lower range over the next two years.
Despite the negative outlook, the bank noted that the accelerating growth of inventories in China could change the price trajectory. If inventory buildup in China continues to reach 0.8 million barrels per day, up from 0.4 million barrels per day since the start of the year, it could add $6 to the average Brent price in 2026, raising the estimate to $62 per barrel. Currently, Brent contracts are trading near $67, while West Texas Intermediate (WTI) crude is at $63.
Oil prices stabilized during Wednesday’s trading after the sharp decline seen in the previous session. Brent and WTI lost more than 2% at the start of the week, due to profit-taking pressures and rising geopolitical uncertainty. However, oil prices slightly rebounded to $67.18 per barrel for Brent and $63.22 per barrel for WTI.
On the fundamental side, the American Petroleum Institute (API) report provided some support for prices, showing a decrease of 970,000 barrels in U.S. crude inventories, less than the anticipated drop of 1.7 million barrels. Meanwhile, gasoline and distillate inventories fell by 2.1 million barrels and 1.5 million barrels, respectively, which could support price stability in the short term.
Geopolitically, pressures increased following a series of Ukrainian drone attacks on Russian refineries, prompting Moscow to increase crude oil exports from its western ports by 200,000 barrels per day. These developments add complexity to the market landscape, contributing to increased supply in global markets while geopolitical tensions continue to create uncertainty.
The U.S. has imposed an additional 25% tariff on India’s oil imports, raising the total tariff to 50% effective August 27. Despite this move, India resumed purchasing Russian oil after a temporary halt, raising questions about the impact of these tariffs on future Russian oil flows to India.
Investors are now awaiting the official U.S. inventory data from the Energy Information Administration (EIA), which is expected to provide a clearer picture of supply and demand in the U.S. market. Any further declines in U.S. inventories could boost market momentum, while other geopolitical and economic factors continue to significantly influence price movements.
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