US Stock Market: Goldman sticks to oil forecast as demand weakness deepens

Goldman Sachs has indicated that softer global oil demand and easing supply disruptions are offsetting key risks in its oil price outlook. Despite these shifting dynamics, the bank has left its average price forecasts for 2026 unchanged, signalling a cautious but stable long-term view.

The bank continues to project Brent crude at $83 per barrel and West Texas Intermediate at $78 per barrel for 2026. These projections are based on the assumption that oil flows through the Strait of Hormuz will gradually return to normal levels by mid-May. This strategic waterway remains critical to global energy markets, handling roughly one-fifth of the world’s oil and liquefied natural gas shipments.

Recent market movements reflect a degree of optimism. Crude prices dropped by about 9 per cent on Friday following reports of progress towards a potential peace agreement in the Middle East. Goldman Sachs noted that such developments could accelerate the unwinding of geopolitical risk premiums, potentially pushing prices lower in the near term.


However, uncertainty persists. A permanent peace agreement has yet to be reached between the parties involved. Diplomatic signals have been mixed, with U.S. President Donald Trump suggesting that an end to the conflict could be near, while Iranian Foreign Minister Abbas Araqchi indicated that the Strait of Hormuz remains open following a ceasefire between Israel and Lebanon, Reuters said.

Supply-side risks remain a focal point. Although flows through the Strait of Hormuz are still significantly reduced, Goldman Sachs highlighted increasing downside risks if Persian Gulf production rebounds faster than expected. Factors such as lower-than-anticipated production shutdowns and substantial regional storage capacity could accelerate supply recovery and weigh on prices.

Demand-side pressures are also shaping the outlook. The bank pointed to notable weakness in oil consumption, particularly in petrochemical feedstocks and jet fuel. Elevated refined product prices and margins have dampened demand, contributing to a softer overall market environment, Reuters added.

Preliminary data suggest that global demand losses in early 2026 may exceed those observed during major oil price shocks in 2011 and 2022. This trend underscores the severity of the current slowdown.

The impact has been especially pronounced in emerging markets across Asia and Africa, where oil consumption tends to be more sensitive to price fluctuations, Reuters said. This regional demand softness further reinforces the bank’s view that downside risks to oil prices are growing, even as geopolitical tensions begin to ease.