Goldman Sachs has revised its oil outlook, forecasting Brent crude below $70 by the end of 2023 if regional strains ease, signalling a possible shift in energy markets linked to geopolitical developments and Opec supply strategies.
Goldman Sachs has said it expects oil to remain under pressure by the end of the year, even as Middle East tensions keep markets unsettled. Ashok Varadhan, co-head of global banking and markets at Goldman Sachs, said on the bank’s podcast that he sees Brent crude finishing the year below $70 a barrel if regional strains ease and disruption risks around the Strait of Hormuz fade. He also said a deal involving the waterway could soften energy prices and improve the inflation outlook.
That view is notably more cautious than some of Goldman Sachs’ earlier oil calls. In an analysis published by the bank, oil was forecast to trade between $70 and $100 a barrel for most of 2024, with short-term swings driven by weaker demand growth, recession risks and geopolitical shocks. In another note, Goldman Sachs said Brent could climb as high as $107 by year-end if Opec holds firm on supply. Yet a separate report argued that Opec’s unusually strong pricing power could set a floor under crude, prompting the bank to lift its year-end Brent forecast to $95 from $90.
Varadhan also used the podcast to question market expectations for US interest rates. He said he does not agree with bets that the Federal Reserve will raise rates again this year and expects policymakers to leave the benchmark rate unchanged through the end of the year. He linked that view to easing inflation pressure from tariffs and to the possibility that a reduction in Middle East tensions could help keep energy costs contained.
The comments come as oil markets continue to move sharply on headlines. Brent ended last week at $82.28 a barrel before rising towards $84.35 in early trading this week, after a 6.4% weekly decline and then a 2.5% rebound. The latest moves reflect the same mix of forces Goldman Sachs has highlighted in its research: geopolitical risk, Opec supply discipline and the possibility that a broader easing in tensions could eventually pull prices lower rather than higher.
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