Oil markets are likely to face renewed downside in 2026 as accelerating production growth deepens an already sizable surplus, according to analysts at Goldman Sachs. The bank expects the forces that weighed on prices in 2025 to remain in place, with abundant supply continuing to outweigh geopolitical risks and limiting any durable price recovery.
Brent crude fell 14% in 2025 despite frequent spikes linked to geopolitical flashpoints — a pattern Goldman strategists believe will persist.
Goldman’s team, led by Daan Struyven, forecasts average 2026 prices of $56 a barrel for Brent and $52 for WTI, well below current forward prices of roughly $62 and $58. The projections reflect what the bank describes as a sustained wave of new supply, leaving the market with an estimated surplus of around 2.3 million barrels per day.
Growing global inventories underline the imbalance, with strategists arguing that “rebalancing the market likely requires lower oil prices in 2026” unless there are significant supply disruptions or fresh output cuts from OPEC.
In its base-case outlook, Goldman assumes OPEC will not introduce additional cuts next year, noting that the supply increases seen in 2025 were intentional and that recent price weakness is driven by temporary supply strength rather than softening demand.
The bank expects prices to drift lower through the year, with Brent and WTI bottoming near $54 and $50 a barrel, respectively, in the fourth quarter of 2026 as stock builds accelerate at OECD commercial storage sites. Analysts added that onshore inventories are becoming increasingly important for price formation, as floating storage is already elevated and beginning to level off.
Supply-side strength remains the dominant theme. Goldman points to continued production outperformance in the United States and Russia, along with “slightly higher Venezuela production,” as factors pressuring longer-dated prices and reinforcing a downward bias across the futures curve.
Reflecting this view, Goldman has lowered its three-year forward fair value estimate for Brent by $5 to $64 and cut its 2027 average price forecasts by the same amount. The bank now expects Brent and WTI to average $58 and $54, respectively, in 2027, as excess supply continues to delay market rebalancing.
While geopolitical risks remain elevated, strategists see them as a source of volatility rather than a driver of sustained gains. “While threats to sanctioned supply could create price spikes,” they said, policymakers’ preference for plentiful energy supply and relatively low oil prices is likely to cap any upside, particularly ahead of U.S. midterm elections.
Overall, risks to the outlook are viewed as broadly balanced but skewed modestly to the downside.
Looking further ahead, Goldman expects oil prices to begin recovering from 2027 as non-OPEC supply growth slows and demand remains resilient. Even so, the bank has trimmed its long-term assumptions, lowering its Brent and WTI forecasts for 2030–2035 to $75 and $71 a barrel, while maintaining that a longer-term price recovery will still be needed to support investment after years of subdued long-cycle spending.
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