In a sobering outlook for global energy markets, Goldman Sachs Group Inc. has flagged the possibility that Brent crude oil could plunge below $40 a barrel by late 2026 — but only in what the bank describes as an “extreme and less likely scenario.”
The warning comes on the heels of two downward oil forecast revisions in just one week by Goldman, reflecting growing uncertainty triggered by an escalating trade war, increasing supply, and fears of a global economic slowdown.
According to a new research note from Goldman analysts, including Yulia Grigsby, such a drastic drop in oil prices could occur if two key pressures converge: a significant global GDP slowdown and a complete unwinding of OPEC+ production cuts. In this rare but plausible situation, oil prices could collapse under the weight of reduced demand and an unchecked surge in global supply.
“This isn’t our base-case scenario,” the analysts clarified. “But in a more extreme environment, we could see Brent fall just under $40 a barrel in late 2026.”
For now, Goldman’s base forecast sees Brent crude at $55 by December 2025, a projection that already marks a considerable retreat from earlier optimism. The firm also outlined a mid-range scenario assuming a “typical” U.S. recession — in which case Brent is expected to hover around $58 per barrel this December, dipping to $50 by December 2026.
The market turbulence has been fueled by geopolitical friction, particularly the Trump administration’s renewed trade tensions with China and other major economies. These tensions have amplified recession fears and weakened confidence in future energy demand.
Meanwhile, the OPEC+ coalition — long a stabilizing force in oil markets through coordinated production cuts — has surprised analysts by increasing output more rapidly than expected, adding further downward pressure on prices.
Other financial institutions, including Morgan Stanley and Société Générale, have followed suit with their own forecast reductions, while also laying out a range of scenarios to account for volatile variables such as global economic health, geopolitical shocks, and supply chain shifts.
Brent crude was last trading at $65.05 a barrel, still bruised from hitting a four-year low earlier this week.
While $40 oil may not be Goldman’s central prediction, the warning underscores how fragile the energy market remains — and how swiftly tides can turn in today’s complex economic and geopolitical climate.
