Investment bank %GoldmanSachs (NYSE: $GS) is warning that crude %Oil prices could fall below $40 U.S. a barrel under extreme outcomes as the risk of a global trade war escalates and supplies rise.
Analysts at Goldman Sachs issued the warning after lowering their oil forecasts twice in the last week as OPEC+ raises its production even as global energy demand weakens.
However, the $40 U.S. per barrel scenario does not represent the investment bank’s current base-case forecast that has Brent crude oil, the international standard, at $55 U.S. by year end.
Rather, $40 U.S. a barrel Brent crude oil represents a worst-case scenario should an all-out trade war breakout and the global economy fall into a recession.
The global oil market has been rocked in recent days as the U.S. escalates its trade war, notably with China, the world’s largest energy importer.
At the same time, the OPEC+ cartel has announced plans to increase production and add more barrels of crude oil to its daily output after a prolonged period of supply constraints.
The result has been that several banks, including Goldman Sachs and %MorganStanley (NYSE: $MS), have revised down their forecasts for oil prices this year and leading into 2026.
Goldman Sachs’ latest oil forecast is contained in a report titled “How Low Could Oil Prices Go?”
Brent crude oil is currently trading at $64.66 U.S. a barrel, near a four-year low.
West Texas Intermediate (WTI) crude oil, the U.S. benchmark, is trading at $61.22 U.S. per barrel, also a multi-year low.
