Goldman Sachs Predicts Oil Prices to Average $76 a Barrel by 2025, Potential Upside Risks Remain
In a recent note, Goldman Sachs forecasted that oil prices will average $76 a barrel in 2025, citing a moderate crude surplus and spare capacity among major producers. The investment bank also noted that concerns over a potential disruption in Iranian supply have eased.
While the medium-term risks to the $70-85/bbl range are two-sided, Goldman believes they are skewed moderately to the downside due to high spare capacity and trade tariffs. However, the bank sees the possibility of prices rising towards year-end, as time spreads are “underpricing physical tightness somewhat.”
Despite large global spare capacity and undisrupted Iran oil production, Goldman analysts do not believe a 2025 supply glut is inevitable. Geopolitical risk premiums are limited, with tensions between Israel and Iran having minimal impact on oil supply. Additionally, OPEC+ countries have high spare capacity, further mitigating supply risks.
However, supply risks will persist as long as conflicts in the Middle East remain unresolved, potentially leading to disruptions that could tighten oil balances. Oil prices settled higher on Tuesday, with Brent futures reaching $76.04, driven by improving demand from China and concerns over a Middle East ceasefire.
In conclusion, while Goldman Sachs predicts stable oil prices in the medium term, potential upside risks remain. It is important for investors to monitor geopolitical developments and supply dynamics to make informed decisions about their investments.