Goldman Sachs has said that Brent crude oil prices could fall below $40 per barrel by late 2026 in what it described as an extreme but unlikely scenario.
The forecast comes as global economic uncertainties and changing supply dynamics continue to pressure the oil market.
This was disclosed in a note titled “How Low Could Oil Prices Go?” released by Goldman Sachs analysts, including Yulia Grigsby, on Sunday, April 7.
According to the note, the sharp drop would only occur if two major factors align: a global economic slowdown and the complete reversal of current OPEC+ production cuts, which would flood the market with supply and limit the ability of non OPEC producers to stay disciplined.
“In a more extreme and less likely scenario with both a global GDP slowdown and a full unwind of OPEC+ cuts, we estimate that Brent would fall just under $40 a barrel in late 2026,” the analysts wrote.
Banks lower oil price forecasts amid economic concerns
The oil market has been volatile in recent sessions, largely due to growing fears of a recession and changing geopolitical dynamics.
Recent moves by the United States to escalate trade tensions, especially with China, have raised concerns over global economic growth, dampening the outlook for energy demand.
Meanwhile, OPEC+ a coalition of the Organization of Petroleum Exporting Countries and its allies has started increasing production more than previously anticipated after years of supply restraint.
This unexpected shift in supply has added further uncertainty to price forecasts.
Against this backdrop, several investment banks, including Goldman Sachs, Morgan Stanley, and Societe Generale, have all lowered their base case projections for Brent crude oil prices.
These institutions have also outlined various possible outcomes, including worst-case and best case scenarios, based on different market conditions.
Goldman’s base case forecast now puts Brent crude at $55 per barrel by December 2026.
In a scenario involving a standard U.S. recession with steady supply conditions, the analysts see oil trading at $58 per barrel by December 2025 and $50 the following year.
Oil market responds to shifting demand and supply signals
As of the time of Goldman’s report, Brent crude was trading at $63.90 per barrel, having recently touched a four year low.
Analysts say that ongoing shifts in demand, supply discipline, and macroeconomic indicators will continue to shape oil prices in the coming months.
While the bank stressed that the sub-$40 scenario is not its primary expectation, it noted that such a decline could materialize if global economic growth weakens further and producers lose cohesion in managing output.
The oil industry has a long history of price swings driven by economic cycles, production decisions, and global events.
As such, experts continue to watch the evolving market dynamics closely, especially as recession fears and geopolitical risks persist.
