With the second Trump administration on the side of oil bears, Goldman Sachs sees oil materially lower over the next 12-24 months within most of its scenarios.
Within a recent client note, the broker’s analysts forecast oil prices to gradually decline to US$60 a barrel (bbl) by 2025 and remain around that level going into 2026. With the market approaching a 0.8 Million barrels per day (mb/d) surplus for 2025, the broker recommends reducing exposure (hedge) 2025 and 2026 crude oil over the next few months.
Once physical surplus finally hits, Goldman Sachs expects it to force weaker time spreads – driving down near dated prices relative to forward prices – in an attempt to incentivise traders to carry additional barrels; especially while interest rates remain relatively high.
The broker also reminded clients that its base case numbers exclude a number of more bearish downside risks for oil prices. These include the potential for even larger US tariffs, Opec+ bringing back some of its very high levels of surplus capacity and Middle East/Russian/Ukraine de-escalation.
What an escalation of these risks could do, explains Goldman Sachs is free up logistical bottlenecks globally and see high Iranian output.
“Our US-Iran base case is a détente that includes incremental sanctions which impact only 200-300 thousand barrels per day (kb/d) of Iranian oil supply during 1H’25… However, the risk of an escalation between the US and Iran that acts to rebalance the oil market or ultimately leads to regional energy infrastructure being substantially impact exists..” said the broker.
However, Goldman Sachs sees this a low likelihood event and certainly not something the broker expects to last.
Gold, Silver, copper & aluminium
Despite a quarter-on-quarter fall in investment demand, Goldman Sachs remains bullish gold with a point-price target unchanged at US$2,800 per ounce and $3,000 per ounce for the 6-12 months respectively. However, the broker has softened its bullishness on silver.
This brings it (silver) into line with gold in terms of potential, especially given the prospect of weaker Chinese and global growth over the 12 months.
Meanwhile, Goldman Sachs is neutral to bearish across the base metals in coming months in anticipation of U.S. tariff policy, China economic headwinds, and rising developed market debt service burdens derailing a meaningful global manufacturing recovery beyond 2025.
“We remain constructive medium-term on copper to $11k/t and aluminium to $2,800/t by 2027, while headwinds could present dip-buying opportunities…”