Goldman Sachs sees oil at $77 in 2025 amid surplus

Wall Street is beginning to sour on the outlook for crude next year, with Goldman Sachs Group Inc. and Morgan Stanley lowering price forecasts as global supplies increase, including potentially from OPEC+.

The two banks now foresee global benchmark Brent averaging less than $80 a barrel in 2025, with Goldman’s revised forecast cut to $77, while Morgan Stanley sees futures ranging from $75 to $78. Both expect that the crude market will be in surplus, with prices trending lower over the 12 months.

A decision by OPEC+ to reverse voluntary supply cuts may mean that the cartel is aiming at “strategically disciplining non-OPEC supply,” Goldman analysts including Daan Struyven said in a note, while warning that crude prices could undershoot its revised forecasts in a number of scenarios.

Oil has fallen in recent months — temporarily losing all year-to-date gains — as investors fretted about slowing demand growth in China, rising supplies from outside OPEC+, as well as the group’s plans to relax output curbs. While the cartel has been willing to sacrifice market share by withholding barrels to support prices, the tentative plan to restore output may alter that stance.

“Crude oil markets remain in deficit, but are likely as tight as they will be for some time,” Morgan Stanley analysts including Martijn Rats and Charlotte Firkins said in a report. By the fourth quarter of 2024, “the balance will likely return to equilibrium, and we estimate a surplus in 2025,” they said.

Brent crude last traded at about $81 a barrel, and has averaged around $83 so far this year. Among Goldman’s scenarios, it said Brent could fall to $60 if Chinese oil demand were to stay flat; $63 if the US imposed an across-the-board tariff of 10% on goods imports; and $61 if OPEC fully reversed its 2.2 million barrels a day of extra cuts through September 2025.

Goldman’s analysis also looked at the potential impact on US shale crude producers should the cartel add supply, or if the world’s largest economy contracted. “Prices could significantly undershoot in the short term, especially if OPEC were to strategically discourage US shale growth more forcefully, or if a recession were to reduce oil demand,” it said.