7 October 2025 | 10:06PM EDT Commodities Research OIL ANALYST Rising Stocks; 2025-2026 Surplus View on Track Yulia Zhestkova Grigsby +1(646)446-3905 | yulia.grigsby@gs.com Goldman Sachs & Co. LLC Daan Struyven +1(212)357-4172 | daan.struyven@gs.com Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to www.gs.com/research/hedge.html. c45a43530f604d12bcb9a82b5aa6b9f6 n O ...

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Summary of Key Points from the Conference Call Industry Overview - The oil market is anticipated to experience a significant surplus in the coming quarters, which is both large and well-anticipated, suggesting a potential weakening of prices but not a disorderly sell-off [1][10] - The forecast for Brent crude oil prices remains unchanged at $60 per barrel for 1Q 2026 [1][6] Core Insights - **Supply and Demand Dynamics**: - Demand growth has stabilized at a below-trend rate of 0.75 million barrels per day (mb/d) for 2025, with a consensus forecast of approximately 0.85 mb/d [9][24] - Non-OPEC supply is expected to grow robustly, with a projected increase of 0.9 mb/d from mid-2025 to the end of the year, driven by new projects in Brazil and Guyana [9][54] - OPEC supply has increased by approximately 1 mb/d since March, primarily from Saudi Arabia and the UAE, but is expected to stabilize moving forward [9][11][66] - **Price Forecasts**: - Despite the anticipated oversupply, Brent prices are expected to remain above $60/bbl due to factors such as storage economics, potential OPEC cuts, and market expectations [14][17] - A surplus of 1.5 mb/d is projected for 4Q 2025, increasing to over 2 mb/d in 1H 2026 [81][83] Additional Important Insights - **Refinery Operations**: - Refinery crude runs are at their highest levels for several quarters, driven by strong margins despite a decline in refining capacity due to shutdowns [3][31] - Observable inventories of refined products have started to rise, indicating that refineries may be overcompensating for closures [35][37] - **Geopolitical Factors**: - Heightened geopolitical risks, including potential sanctions on Iranian oil and tariffs on Indian purchases of Russian oil, could disrupt supply [16] - **Market Sentiment**: - The current market sentiment is characterized by a paradox where oil prices are relatively cheap compared to other assets, yet demand growth remains sluggish [16][28] - **Long-term Outlook**: - The oil market is expected to face challenges in 2026, with a slowdown in non-OPEC supply growth anticipated after a strong exit rate in 2025 [55][56] This summary encapsulates the key points discussed in the conference call, highlighting the current state and future outlook of the oil market, including supply and demand dynamics, price forecasts, and geopolitical considerations.

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Investment Rating - The report maintains a price forecast for Brent crude oil averaging $59 in Q4 2025 and $56 in 2026 despite an increase in OPEC+ production quotas [2][9][18] Core Insights - OPEC+ announced a production increase of 0.55 million barrels per day (mb/d) for August, exceeding both consensus and previous expectations [2][3] - The report anticipates a further increase of 0.55 mb/d for September, completing the return of 2.2 mb/d of cuts and a 0.3 mb/d increase in UAE production [4][6] - The rationale behind these increases includes a steady global economic outlook and resilient demand, as indicated by low oil inventories [3][5] - Compliance with OPEC+ compensation cuts has been stronger than expected, contributing to the revised production assumptions [9][10] - The report highlights that reduced OPEC+ spare capacity is likely to raise long-dated oil prices, estimating a decline in global spare capacity to 2.5-4% of global demand by September 2025 [14][18] Summary by Sections OPEC+ Production Adjustments - OPEC+ has announced a total production increase of 1.92 mb/d, which corresponds to 78% of the total voluntary cuts and the increase in UAE production [3][4] - The expected rise in OPEC+ crude production from March to September is projected to be 1.67 mb/d, reaching 33.2 mb/d by September [6][12] Price Forecast and Market Dynamics - The report keeps the price forecast stable despite the production increases, citing stronger compliance with cuts and potential upside risks to demand forecasts [9][14] - The anticipated increase in global oil demand is projected at 0.6 mb/d in 2025 and 1.0 mb/d in 2026, driven by robust demand from China and global economic activity [14][21] Compliance and Production Realization - The report notes that actual increases in OPEC+ production have been in line with quotas after adjusting for compensation cuts, with a significant portion of the increase attributed to Saudi Arabia [10][13] - The compliance rates among OPEC+ members have varied, with some countries exceeding their required production levels [10][13]

Core Viewpoint - The content emphasizes the importance of conducting personal due diligence and consulting competent advisors before making any financial decisions, particularly in the context of investments and trading activities [1]. Group 1 - The website provides general news, personal analysis, and third-party content intended for educational and research purposes [1]. - It explicitly states that the information does not constitute any recommendation or advice for investment actions [1]. - Users are advised to perform their own research and consider their financial situation before making decisions [1]. Group 2 - The website includes information about complex financial instruments such as cryptocurrencies and contracts for difference (CFDs), which carry a high risk of losing money [1]. - It encourages users to understand how these instruments work and the associated risks before investing [1].

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Core Viewpoint - The content emphasizes the importance of conducting personal due diligence and consulting competent advisors before making any financial decisions, particularly in the context of investments and trading activities [1]. Group 1 - The website provides general news, publications, and personal analysis intended for educational and research purposes [1]. - It explicitly states that the information does not constitute any recommendation or advice for investment actions [1]. - Users are advised to perform their own research and consider their financial situation before making decisions [1]. Group 2 - The website includes information about complex financial instruments such as cryptocurrencies and contracts for difference (CFDs), which carry a high risk of losing money [1]. - It encourages users to understand how these instruments work and the associated risks before investing [1].