Tariff escalation and high spare capacity skew medium-term risks to Goldman Sachs’ oil price forecast to the downside, the bank said.
“While we reduced our Brent forecast range by $5/bbl to $65-80, we expect oil prices to edge up in coming months, and think that market pricing of volatility and of the upside risk from potentially lower sanctioned supply remains too low,” the bank said in a note dated Tuesday.
Goldman Sachs said that Brent prices recovered slightly from the high $60s to just over $70, given mixed geopolitical developments, but oil markets remain focused on price downside.
On the negative side for prices, the Kremlin backed the idea to not hit Ukraine’s energy infrastructure for 30 days, and the U.S. said talks for a full ceasefire would start immediately, potentially incrementally reducing the probability of a near-term tightening in Russia sanctions, they said.
Oil prices slid after Russia agreed to U.S. President Donald Trump’s proposal that Moscow and Kyiv stop attacking each other’s energy infrastructure temporarily, which could lead to more Russian oil entering global markets.
Brent crude futures were down 12 cents, or 0.2%, at $70.44 a barrel by 0106 GMT. U.S. West Texas Intermediate crude (WTI) lost 15 cents, or 0.2%, to $66.75.
(Reporting by Anjana Anil and Rahul Paswan in Bengaluru; Editing by Jacqueline Wong and Rashmi Aich)