Recasts, adds details throughout

March 4 (Reuters) - Higher than expected crude supply and a likely demand hit due to softer U.S. activity and tariff escalation pose downside risks to oil price forecasts, Goldman Sachs said in a note dated Monday.

The bank forecasts Brent oil to average $78/$73 a barrel for 2025/2026 and trade in a range of $70-$85 and U.S. West Texas Intermediate oil to average around $74/$68 per barrel.

Brent LCOc1 futures fell 48 cents, or 0.7%, to $71.14 a barrel at 0620 GMT, as U.S. West Texas Intermediate $(WTI)$ crude CLc1 eased 28 cents, or 0.4%, to $68.09. O/R

Goldman Sachs estimates that Brent would drop to the low-to-mid $60s by end-2026 in a risk scenario where OPEC+ supply rises for 18 months.

U.S. President Donald Trump's new 25% tariffs on imports from Mexico and Canada took effect on Tuesday, along with a doubling of duties on Chinese goods to 20%, launching new trade conflicts with the top three U.S. trading partners.

The investment bank estimated that tariffs on Canada and Mexico oil imports into the U.S. or tariffs on all U.S. oil imports would not significantly affect WTI or Brent prices but would significantly reduce the producer price for tariffed ex-U.S. heavy crude oil and raise U.S. refined product prices, especially in coastal regions.

Goldman Sachs also sees some downside risks to their 1.1 million barrels per day 2025 oil demand growth forecast given recent misses in U.S. economic activity data, tariff escalation, and some ongoing softness in their China oil demand nowcast.

(Reporting by Rahul Paswan, Anjana Anil and Anushree Mukherjee in Bengaluru; Editing by Muralikumar Anantharaman)

((Anjana.Anil@thomsonreuters.com;))