Goldman Sachs(US:GS) Goldman Sachs·2025-03-18 02:02Investment Rating - The report maintains a moderately bullish outlook on oil prices, with a revised forecast for Brent oil at $71/bbl for December 2025, down from a previous estimate of $76/bbl [16][18][80]. Core Insights - Brent oil prices have decreased from over $80/bbl in mid-January to around $70/bbl, primarily due to a shift in market focus from supply risks related to Russia and Iran to concerns over slower US GDP growth [2][6][17]. - The report anticipates oil demand growth of 0.9 million barrels per day (mb/d) in 2025, a reduction from the previous forecast of 1.1 mb/d, influenced by slower US economic growth and higher tariffs [22][24]. - OPEC+ supply is expected to increase starting in April 2025, which contributes to the downward revision in price forecasts [30][31]. Summary by Sections Price Forecasts - The December 2025 forecast for Brent oil is reduced to $71/bbl (WTI at $67), with a range of $65-80 for Brent and an average forecast of $68 for 2026 [16][18][80]. - The report expects a modest recovery in prices in the coming months, with Brent and WTI projected to reach $74 and $70, respectively, by June 2025 [44][50]. Demand and Supply Dynamics - The US is projected to drive a significant portion of the global oil demand downgrade, with a forecast of 130,000 barrels per day (kb/d) reduction in 2025 due to slower GDP growth [24][29]. - OPEC+ production increases are expected to total 430 kb/d over four months, starting in April 2025, which is anticipated to affect market dynamics [30][31]. Economic Factors - The report highlights that the US GDP growth forecast has been downgraded from 2.4% to 1.7% for 2025, impacting oil demand projections [24][27]. - The overall policy uncertainty and trade policy uncertainty indices are at high levels, contributing to the cautious outlook on oil demand [14][29]. Investment Recommendations - The report suggests that producers should consider hedging against potential medium-term price declines, especially after a short-term price recovery [70][71]. - Refiners are advised to hedge deferred distillate margins due to potential downward pressure on diesel margins from lower tanker freight rates and competition from LNG trucking [71].