Oil markets opened the week with a significant decline, following remarks by U.S. President Donald Trump, who gave Russia a 50 day deadline to end the war in Ukraine before imposing further punitive measures. This stance eased fears of a sudden disruption in global supplies, which was immediately reflected in prices: Brent crude dropped by 0.8%, while West Texas Intermediate (WTI) lost around 0.9%. Despite the decline, markets remain cautious, recognizing that the deadline may be temporary and that escalation remains a real possibility at any moment, keeping investors on edge for any political or on the ground developments that could reignite risks.
Washington’s threat to impose secondary sanctions on countries continuing to buy Russian oil chief among them China, India, and Turkey has once again highlighted the fragility of global supply chains. Should these sanctions be implemented, they would disrupt the supply balance, given the challenge of replacing Russia’s exports of over 7 million barrels per day, even with OPEC+ operating at full spare capacity. However, markets are not ruling out the possibility that Trump may ultimately backtrack on these threats, especially amid his desire to keep domestic energy prices low in a period of mounting election preparations in the United States.
Data from China showed that the country’s GDP grew by 5.2% year on year in the second quarter of 2025, slightly exceeding expectations. However, this growth does not reflect strong domestic momentum, as it was partly driven by rising exports and government stimulus measures. Weak retail sales and continued declines in consumer confidence point to sluggish internal demand, placing pressure on forecasts for energy and metal consumption, and making the market highly sensitive to any new negative signals from Beijing during the second half of the year.
Parallel to the Russian file, trade tensions between Washington and several key partners have escalated, following Trump’s announcement of tariffs of up to 30% on imports from the European Union and Mexico starting in August. Brussels responded swiftly, preparing a retaliatory list targeting U.S. goods worth $84 billion. This trade escalation threatens global industrial activity and increases the likelihood of weaker real demand for oil, especially as the dispute extends to other countries such as Japan, Canada, and Brazil.
Amid this complex landscape, Goldman Sachs raised its oil price forecasts for the second half of 2025, supporting its outlook with declining inventories in advanced economies and continued restrictions on Russian production. The updated estimates placed Brent crude at $66 per barrel and WTI at $63. Nevertheless, the bank maintained a cautious view for 2026, projecting average prices of $56 for Brent and $52 for WTI, with a potential global supply surplus reaching 1.7 million barrels per day.
Goldman Sachs presented a range of scenarios reflecting the complex future of the oil market. If Iranian exports were to decline significantly, Brent could surge to nearly $90 per barrel, driven by heightened geopolitical risk and tighter supplies. Conversely, if major countries like China intensify strategic crude oil stockpiling, this could ease price pressures and stabilize prices near $60 in 2026.
The most pessimistic scenario envisions a complete dismantling of OPEC+ production cuts, coupled with a global economic recession, which could send oil prices plummeting toward $40 per barrel. Despite these varying possibilities, the bank maintains an optimistic outlook for the post 2026 period, relying on the continued decline in investment in traditional energy projects outside OPEC and the lack of alternative production capacity capable of meeting rising global demand.
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