Beware of Oil Price Shocks! Goldman Sachs Predicts a Significant Crude Oil Surplus This Year and Next.

Tariff policies are expected to significantly drag down global economic performance, which will have a particularly pronounced impact on the crude oil market, as economic downturns will suppress the rebound in crude oil demand.

Goldman Sachs' latest analysis indicates that the global crude oil market is expected to face a daily surplus of 800,000 barrels in 2025, increasing to 1.4 million barrels in 2026. The trade war and OPEC+'s relaxation of supply restrictions are continuously exacerbating market pessimism.

Goldman Sachs analysts warn that although the market has already priced in the impact of future inventory increases, a significant surplus is still expected in 2025 and 2026, which will further depress oil prices.

They predict that Brent crude will average around $63 per barrel for the remainder of this year, but this price is based on the assumption that the US will not fall into a recession and that OPEC+ will only increase its supply slightly.

Demand Shadows

Last week, the US sharply revised down its forecast for global crude oil demand growth in 2025 to 900,000 barrels per day, a reduction of approximately 400,000 barrels from the previous forecast. On Monday, OPEC also released its monthly report, significantly lowering its global oil growth forecasts for 2025 and 2026 to 1.3 million and 1.28 million barrels per day, respectively.

The OPEC report noted that oil demand is expected to be supported by air travel and road traffic, but this outlook is affected by global economic development uncertainties as the US announces new tariff policies.

The latest International Energy Agency (IEA) report on Tuesday also disappointed the market. The report revised down the global oil demand growth rate for 2025 by 300,000 barrels per day MoM to 730,000 barrels per day and expects the growth rate to further slow to 690,000 barrels per day in 2026.

The IEA stated that due to the surge in US tariffs and heightened recession concerns, risk sentiment has further deteriorated, with global oil prices plummeting by about $10 per barrel in March and early April.

The IEA also warned that the sharp decline in oil prices has put the US shale oil industry in distress. According to the latest energy survey report from the Dallas Fed, companies believe that oil prices need to stabilize at $65 per barrel to make drilling new wells profitable.

As of press time, WTI crude futures are fluctuating around $61, while Brent crude is trading around $65.