Brokerage firm Goldman Sachs, after cutting oil price forecasts twice in a week, on Tuesday, April 8 said Brent Crude has an outside chance to drop below $40 a barrel as the trade war flares and supplies increase.

Goldman Sachs said that such a scenario is possible under “extreme” outcomes.

Assuming a “typical” US recession, plus baseline expectations for supply, Brent was seen at $58 a barrel this December, and $50 in the same month next year, the Goldman analysts said in the note, titled “How Low Could Oil Prices Go?”

“In a more extreme and less likely scenario with both a global GDP slowdown and a full unwind of OPEC+ cuts, which would discipline non-OPEC supply, we estimate that Brent would fall just under $40 a barrel in late 2026,” analysts including Yulia Grigsby said in an April 7 note.

This view does not represent Goldman Sachs’ present base case outlook, which has pegged brent at $55 per barrel next December.

Global crude oil prices have seen a free fall, tanking to nearly $60 per barrel from nearing levels of $75 just last week.

US President Donald Trump’s trade war push, rising fears of recession in the US, lack of global demand have all acted as headwinds for oil recently.

If that was not enough, OPEC+ has pivoted by adding more barrels back to the market than were expected after a long period of supply restraint.

As a result, brokerages such as Goldman Sachs, Morgan Stanley cut their base case oil price forecasts.

Brent was last at $65.05 a barrel, after hitting a four-year low on Monday.

With inputs from Bloomberg

First Published: Apr 8, 2025 12:08 PM IST