Wall Street banks are cutting oil price forecasts for 2025 and 2026 after OPEC+ announced a sharper-than-expected increase in production. The move has added more pressure to an already fragile market and signals a major shift in strategy by the oil alliance, led by Saudi Arabia and Russia.
Over the weekend, OPEC+ agreed to raise output by 411,000 barrels per day (bpd) starting in June—nearly triple the previously scheduled increase. This marks the second large hike in as many months and follows May’s similar production boost.
Major U.S. and European banks, including Goldman Sachs and Morgan Stanley, have responded by lowering oil price projections. Analysts say the decision reflects Saudi Arabia’s frustration with members like Iraq and Kazakhstan, who consistently exceed their quotas but fail to follow through on promised production cuts.
Instead of pushing for stricter compliance, Riyadh appears to be opting for a strategy that allows overproducing countries to “compensate” through legalized higher output, while also lifting its own production. Analysts believe this is part of an effort to discipline U.S. shale producers by pushing prices below break-even levels.
Goldman Sachs, which had already lowered its oil forecasts twice in the past month, cut Brent crude’s 2025 average price to $60 per barrel, down from $63. For U.S. benchmark WTI crude, the bank now expects $56 per barrel next year, down from $59. For 2026, the forecast is also lower, with Brent at $56 and WTI at $52.
“Saturday’s decision increases our confidence that the new baseline size of production increases is likely 0.41mb/d,” Goldman analysts, led by Daan Struyven, wrote in a note. They added that high spare capacity and recession fears tilt oil price risks to the downside.
Morgan Stanley echoed this view, cutting its Brent forecast for the second half of 2025 by $5 to $62.50 per barrel. The bank now expects a market surplus of 1.1 million bpd, up from an earlier projection of 700,000 bpd.
UK-based Barclays also revised its Brent forecast, reducing its 2025 projection by $4 to $66 and its 2026 forecast by $2 to $60. ING lowered its 2025 Brent outlook from $68 to $62 and now expects an average of $65 for the year.
Warren Patterson, head of commodities strategy at ING, warned that the situation could change again. “This will change if OPEC+ reverses policy once again or if lower oil prices embolden President Trump to take a more aggressive approach toward several sanctioned oil-producing countries,” he said.
With rising supply and uncertain demand, analysts say oil prices could face more pressure unless OPEC+ adjusts course. For now, markets remain focused on how long Saudi Arabia is willing to endure lower prices in what many see as a brewing price war.
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