Goldman Sachs Projects Decline in Brent Oil Prices to Around $55 per Barrel by 2026 Amid Supply Surplus and Recession Risks

Following a spike in Brent prices to approximately $75 per barrel due to Middle Eastern tensions, Goldman Sachs’ commodities team now expects prices to normalize downwards, with an average Brent price forecast of $56 in 2025 and $55 in 2026. This outlook incorporates projections of expanding global oil supply, including moderate OPEC+ production increments and rising output from outside the U.S. shale sector. Meanwhile, global economic headwinds and ongoing trade conflicts, particularly between the U.S. and China, suppress demand growth, estimated at only 300,000 barrels per day through end-2025, and further lowered in late 2026 forecasts. The bank cautions that in more severe scenarios—such as a full reversal of OPEC+ production cuts combined with a deeper global recession—Brent prices could fall below $40 per barrel by 2026, a level unseen since the early 2020 pandemic shock.

Goldman’s discounted cash flow models reveal varied impacts across Latin American producers. Brazilian Brava Energia (BRAV3) exhibits the highest vulnerability, with each $10 decline in Brent potentially halving its fair equity value and reducing free cash flow by roughly 13 percentage points, due to leveraged upstream operations. Argentine Vista Energy also shows strong price sensitivity, mainly from its concentrated oil output in Vaca Muerta and limited diversification into gas or refining. Conversely, Colombia’s Ecopetrol benefits from portfolio diversification across midstream, downstream, energy generation, and natural gas, resulting in lower exposure to commodity volatility.

Petrobras (PETR4) remains under a positive recommendation despite these dynamics, supported by a projected dividend yield near 11% in 2025 and 2026, with price targets between R$39.90 and R$43.80 on Brazilian shares and $14.10 to $15.50 on ADRs. The bank flags risks from possible changes in Petrobras’s shareholder remuneration policy and government interference in royalties and field auctions. PRIO (PRIO3) is seen as moderately sensitive, with operational efficiencies offsetting cash flow susceptibilities, though recent asset acquisitions could elevate cost structure and price exposure.

Overall, Goldman Sachs confirms that persistent global supply surpluses coupled with geopolitical and economic uncertainties will likely restrain oil prices over the coming years, placing pressure on upstream-focused firms in Latin America while offering some resilience to diversified operators.