Goldman Sachs Group stated on Monday that the decline in oil prices is expected to persist through 2026, driven by a surge in production that will sustain a significant supply surplus of approximately 2 million barrels per day. The bank forecasts Brent crude to average $56 per barrel and WTI crude at $52 per barrel in 2026, below the current forward contract prices of $63 and $60, respectively. As of the latest update, Brent crude futures traded around $64.31 per barrel, while U.S. West Texas Intermediate (WTI) crude futures stood at $60.02 per barrel.

Goldman Sachs highlighted two key factors behind the supply surge in 2025-2026: long-cycle projects that received final investment decisions just before the pandemic, were delayed during COVID-19, and are now coming online in clusters; and OPEC's strategic decision to unwind production cuts. Since April, OPEC+ (the Organization of the Petroleum Exporting Countries and allies including Russia) has been gradually increasing output. Meanwhile, other producers like the U.S. and Brazil are also ramping up supply, exacerbating oversupply concerns and pressuring oil prices.

The International Energy Agency (IEA) warned that the global oil market could face a surplus of up to 4.09 million barrels per day next year. Goldman Sachs projects a rebound in oil prices starting in 2027, as low prices in 2025-2026 will curb non-OPEC supply growth, and minimal new projects will come online post-2026 due to 15 years of underinvestment. "We thus expect Brent/WTI prices to rise toward our long-term forecasts of $80/$76 by end-2028," the bank noted.

Goldman Sachs cautioned that Brent crude could drop to the $40 range if non-OPEC supply proves more resilient than expected or if the global economy enters a recession in 2026/2027. Conversely, prices may climb above $70 per barrel if Russian supply declines more sharply.