Oil prices could fall to the USD50 range by year-end if there's a recession, Goldman Sachs says

The tariff-sparked market sell-off hasn't spared oil, and analysts at Goldman Sachs see prices heading even lower if the global economy tips into a recession.

This week, Goldman Sachs analysts lowered their forecast for Brent to an average of USD62 per barrel in 2025 and USD58 for WTI under the assumption that Trump's tariffs will be reduced, the US avoids a recession, and OPEC raises supply only modestly in the months following its May increase.

But if tariffs remain as high as initially announced and a recession follows, prices could head into the USD50 range by year-end.

"Assuming a typical US recession and our OPEC baseline, we estimate that Brent would decline to USD58/50 by Dec25/26, respectively" Yulia Zhestkova Grigsby, vice president of commodities research at Goldman Sachs, wrote in a note to clients on Mon night.

"In a global GDP slowdown scenario and keeping our OPEC baseline unchanged, we estimate that Brent would decline to USD54/45 by Dec25/26," she added.

In the rare but most severe possible scenario, Goldman sees a case for Brent falling below USD40.

"Finally, in a more extreme and less likely scenario with both a global GDP slowdown and a full unwind of OPEC+ cuts, which would discipline non-OPEC supply, we estimate that Brent would fall just under USD40/bbl in late 2026," Grigsby said.

On Tue, crude bounced back more than 1%, with West Texas Intermediate futures hovering above USD61 per barrel. Brent also rose above USD65 per barrel.

The rebound follows a 13% drop over the last three sessions as traders assessed the impact of a global trade war following Trump's sweeping tariff announcement last week. Concerns about excess supply after OPEC and its allies agreed to increase output in May also weighed on prices.

"Still, while it is currently difficult to predict the overall direction of developments, we believe that, for oil prices, the trajectory is unmistakably one-way," she added.

The analysts believe supply-demand fundamentals may help the Trump administration in achieving its goal of lower oil prices.

"Our view on 2025 has remained largely unchanged over the past year and a half: we anticipate a large 1.3 mbd surplus and an average Brent of USD73, although we expect prices to close the year firmly below USD70, with Brent exiting the year at USD64," wrote the analysts.

Despite Trump's goal to lower energy prices, Citi analysts foresee a USD60 floor on Brent.

"Last week's decision by OPEC+ to raise output in May does suggest the group's balancing point might be lower than the roughly USD68/b Brent average of the last nine years, perhaps as part of some backroom deal with the US Administration," wrote Citi's global head of energy research, Alastair Syme, in a Mon note.

"That said, we see incentive for defense at USD60/b, both from a perspective of OPEC+ budgets and from the perspective that the US Administration likely wants to protect the economics of the US shale industry," he added.