Goldman Sachs Cuts Oil Price Outlook Once Again
Goldman Sachs has reduced its outlook for oil prices for the third time since the start of April, now expecting Brent crude to average $63 this year and $58 in 2026. The bank sees WTI at an average of $59 per barrel this year, falling to $55 in 2026, Reuters reported. The update follows one from April 4, when Goldman slashed its 2025 outlook for Brent and WTI by 5.5% and 4.3%, respectively, to $69 for a barrel of Brent crude and $66 for a barrel of West Texas Intermediate. Then, on April 6, the bank cut its 2026 outlook for the oil benchmarks. “Oil prices would likely exceed our forecast if the Administration were to reverse tariffs sharply and deliver a reassuring message to markets, consumers, and businesses,” Goldman analysts said in their note. In its latest price update, Goldman predicted weaker-than-expected oil demand growth this year, at a modest 300,000 barrels daily this year. Goldman also revised down its demand forecast for the end of 2026, slashing the figure by 900,000 bpd for the final quarter, Reuters also noted in its report. Prices could fall a lot further, too, Goldman said, in case OPEC+ decided to remove the production caps it adopted in 2023. In such a scenario prices could fall to the $40s for Brent crude, the bank’s analysts estimated, adding the global benchmark could even fall below $40 per barrel “in an extreme combined scenario.” “The risks to our reduced oil price forecast are to the downside, especially for 2026, given growing risks of recession and to a lesser extent of higher OPEC+ supply,” Godman said in one of its earlier April notes, referring to the most expected outcome of the tariff war that President Trump started in early April. However, there is a good chance the war will end before it start hitting the global economy, eliminating the biggest risks as defined by Goldman Sachs and thus reducing the danger of a more serious oil price decline.
Oil Outlook Takes a Beating from Trade War Jitters
Crude oil is set to end another week with substantial losses as markets reel from President Trump’s tariff offensive, despite the fact he pulled the punch at the last second. With one notable exception: China. As Beijing and Washington take turns to up the ante, the outlook for oil and energy in general has gone from bright to really dim. Brent crude is about to end this week relatively unchanged but down by $6 per barrel from a month ago. West Texas Intermediate has slipped below $60 per barrel and might spend some time there. The drop is all a result of the sudden change in the outlook for oil demand—because of Trump’s tariff war. “We are going into a recession,” Renaissance Macro Research’s head of economic research, Neil Dutta, wrote in a note cited by Bloomberg. “I don’t think it is especially controversial to say so.” The statement sums up the dominant sentiment among economic forecasters as well as, it seems, the majority of market players. Warnings of a recession have multiplied at bacterial-growth speed, and now even the Energy Information Administration at the U.S. Department of Energy is warning of the negative impact that the tariff war would have on oil demand. Bloomberg noted that oil prices have been trending down since Trump took office. At the time, the reason was the overwhelming expectation that the new U.S. president would somehow convince oil and gas producers to boost output even faster than they were already. When the industry made clear it had no intention of doing so, attention turned to Trump’s trade policies, which were a lot more controversial than his “Drill, baby, drill” dream. The logic of all the warnings and all the grim demand predictions is simple enough: tariffs would supercharge inflation, leading to an overall drop in spending. This, in turn, would destroy oil demand. The basis of that argument is sound—which is why Trump took all the forecasters by surprise when he instituted a 90-day pause on the massive tariffs he had announced earlier in the week in anticipation of their eagerness to negotiate new trade deals with the United States. The risk of a deep global recession just became a lot smaller. However, the tariff exchange between the U.S. and China has not stopped. A series of retaliatory tariff announcements had Trump in the lead with a tariff total of 145% on Chinese imports. China first raised the tariff to 85%, but has since upped its game and is now trailing him with a grand total of 125%. While traders and analysts processed the exchange, some observers were quick to comment that either Trump or China blinked first after both sides signaled they were open to a trade deal to replace the tariff race to the bottom. Trump himself said he would love to do a deal with Beijing. Beijing, for its part, said that it was open to negotiations, but they had to be based on mutual respect. This suggestion that the two sides were open to negotiations has done nothing for oil prices—yet. And there is a reason for that. China has been reducing its intake of U.S. crude since January when Trump took office. Indeed, U.S. oil exports to China have shrunk considerably since the start of 2025, amounting to just 1% of total oil imports by the world’s second-largest consumer. It bears noting that the U.S. has never been a top supplier of oil to China, with the 2024 total at a little over 200,000 barrels daily. Still, any negative trends in imports are inevitably going to affect prices, which is exactly what these trends did. “With China imposing 84% tariffs on goods from the US, the cost of US crude would be almost double — $51 a barrel more expensive, based on $61 WTI,” Ivan Mathews, head of APAC analysis for Vortexa, told Bloomberg this week. “This makes running US crude uneconomical for Chinese refiners.” This is not good news for U.S. producers, even though they were not shipping millions of barrels of crude to China. The oil market these days runs on perceptions rather than hard data, and the perception is that the tariff war is killing oil demand, so the outlook for oil demand is dimming. It may not remain dim for long, though. “I’m sure that we’ll be able to get along very well,” President Trump said on Thursday, referring to his Chinese counterpart Xi Jinping. “In a true sense he’s been a friend of mine for a long period of time, and I think that we’ll end up working out something that’s very good for both countries,” Trump said, quite likely creating some confusion among followers of current political events. If both sides in a tariff spat are willing to end the spat with a deal, then this greatly improves the chances of such a deal being done. If such a deal is indeed done, fears of a global recession and market crashes should dissipate—and so should any major worries about oil demand. If it takes nothing less than a global recession to stem growth in oil demand, then it’s safe to say that demand is quite solid.
BP bets on NEC-25 for gas surge, credits PM Modi’s reforms
Global energy giant BP Plc, which produces one-third of India’s natural gas, is targeting nearly 10 million cubic meters per day of additional output from the NEC-25 block in the Mahanadi basin, spurred by recent upstream reforms introduced by the Modi government. Its chief executive Murray Auchincloss said India’s upstream oil and gas policy overhaul through a new legislation has made several improvements important for foreign investors and will help attract global players. BP and its partner Reliance Industries Ltd (RIL) produce about 28 million standard cubic meters per day or almost a third of India’s total gas output, from their Krishna Godavari basin deepsea block KG-DWN-98/3 (KG-D6) in the Bay of Bengal. The two are now looking to put into production discoveries in the Block NEC-OSN-97/2 (NEC-25) off the Odisha coast. “Block NEC 25 represents an opportunity to unlock the hydrocarbon potential of a new hub on India’s East coast, with production potential of up to 9.9 mmscmd of gas,” Auchincloss said. “We and RIL with other industry operators in the area including ONGC are working with the Ministry of Petroleum and Natural Gas to progress development.” He did not elaborate. BP-Reliance had in 2012-13 proposed a USD 3.5 billion plan for developing 1.032 trillion cubic feet of inplace reserves discovered in NEC-25. But the plan was delayed because of a dispute with upstream regulator the Directorate General of Hydrocarbons (DGH) over technical aspects of the finds. They have renewed plans after the government led by Prime Minister Narendra Modi unveiled a series of reforms in recent years. “Working in our partnership, RIL and BP have already developed three projects in KGD6 Block, which together are currently producing 28 mmscmd of gas,” he said. “We are working on multiple options to augment and sustain gas production from KGD6, such as infill drilling in the R-Cluster and Satellites Cluster, and well workovers on MJ.” Besides, the partners have two other exploration blocks that they had won in different rounds of OALP bidding – KG-UDWHP-2018/1 and KG-UDWHP-2022/1. “If successful, discoveries could be developed using some already existing infrastructure,” he said. BP has been in India for over a hundred years, with its connection through lubricant seller Castrol. India is amongst the fastest growing economies in the world, backed by industrial growth, infrastructure development, a young population and urbanization, and this is reflected by growth in its primary energy usage, the BP head, who was in India earlier this month, said. “The country’s stable governance, policy support and access to a large high-capability talent pool makes investment here very attractive. Building on our long relationship, BP aims to be the trusted energy partner of choice to India. We will look to leverage and grow our current positions, bringing our global capabilities and technology to bear and deepening our partnerships,” he said. And among the factors making India an attractive investment destination is a legislation that amended the Oil Fields (Regulation and Development) Act of 1948 by expanding its scope to include shale oil, shale gas and coal bed methane, in addition to oil and gas, while introducing sweeping measures aimed at improving the ease of doing business as well as providing fiscal and policy stability aimed to attract domestic and international investment. The new legislation “made several improvements that are important for foreign investors like us,” Auchincloss told PTI in an interview. The BP CEO was in India earlier this month, during which he met Prime Minister Narendra Modi as well as Oil Minister Hardeep Singh Puri. “We believe the reforms can help mitigate risks and ensure operational clarity, creating an investor-friendly environment, supporting the modernisation of India’s oil and gas sector, and attracting global players,” he said. He was deeply appreciative of the amendments made in the oilfield act to ease the way for increased foreign investment. He assured the Prime Minister that BP was working to support India’s energy needs in line with Modi’s vision of energy security for India with support from the ministry. The new law gives policy stability and improved financial terms through a series of changes to the decades-old act. These include freedom to pursue international arbitration in the event of disputes, as well as offering a longer lease period. India, which is 85 per cent dependent on imports for meeting its oil needs and buys nearly half of its gas needs from overseas, in recent years has undertaken a series of upstream reforms aimed at encouraging discovery of more oil and gas through increased exploration and bringing them to production quickly. These include greater marketing freedom to producers and allowing companies to carve out areas for oil and gas exploration under the Open Acreage Licensing Policy (OALP). Last year, BP and RIL teamed up with state-owned Oil and Natural Gas Corporation (ONGC) to bid for an oil and gas exploration block. “RIL and BP teamed up with ONGC for the OALP-IX bid round to strengthen our bid for exploration rights in the Gujarat-Saurashtra basin. This was our first collaboration, bringing together ONGC’s experience as India’s largest oil and gas producer alongside the Reliance-BP joint venture’s technical expertise and private sector agility,” BP CEO said. “We believe such an approach supports India’s aim of boosting domestic production and reducing reliance on imports by attracting investment through OALP. Our collaboration, sharing knowledge and expertise, has the potential to improve efficiency in exploration and production processes.” Both Modi and Puri encouraged BP to participate in the current bid round under OALP. RIL holds 66.67 per cent stake in NEC-25 block, where 9 gas discoveries in the northern part and six in the southern area have been made. BP holds the remaining 33.33 per cent. Some of these discoveries had been relinquished for either not meeting timelines or being too small to develop. Besides upstream, BP has a substantial presence in the downstream sector through its joint venture with Reliance Jio. Jio-BP has close to 2,000 petrol pumps in the country and is setting up a chain of
Back to Russian gas? Trump-wary EU has energy security dilemma
More than three years after Russia’s invasion of Ukraine, Europe’s energy security is fragile. U.S. liquefied natural gas helped to plug the Russian supply gap in Europe during the 2022-2023 energy crisis. But now that President Donald Trump has rocked relationships with Europe established after World War Two, and turned to energy as a bargaining chip in trade negotiations, businesses are wary that reliance on the United States has become another vulnerability. Against this backdrop, executives at major EU firms have begun to say what would have been unthinkable a year ago: that importing some Russian gas, including from Russian state giant Gazprom, could be a good idea. That would require another major policy shift given that Russia’s invasion of Ukraine in 2022 made the European Union pledge to end Russian energy imports by 2027. Europe has limited options. Talks with LNG giant Qatar for more gas have stalled, and while the deployment of renewables has accelerated, the rate is not fast enough to allow the EU to feel secure. “If there is a reasonable peace in Ukraine, we could go back to flows of 60 billion cubic metres, maybe 70, annually, including LNG,” Didier Holleaux, executive vice-president at France’s Engie, told Reuters in an interview. The French state partly owns Engie, which used to be among the biggest buyers of Gazprom’s gas. Holleaux said Russia could supply around 20-25% of EU needs, down from 40% before the war. The head of French oil major TotalEnergies, Patrick Pouyanne, has warned Europe against over-relying on U.S. gas. “We need to diversify, many routes, not over-rely on one or two,” Pouyanne told Reuters. Total is a large exporter of U.S. LNG and also sells Russian LNG from private firm Novatek . “Europe will never go back to importing 150 billion cubic meters from Russia like before the war … but I would bet maybe 70 bcm,” Pouyanne added. GERMAN PIVOT France, which produces large amounts of nuclear power, already has one of the most diversified energy supplies in Europe. Germany relied heavily on cheap Russian gas to help drive its manufacturing sector until the Ukraine war and has fewer options. In Leuna Chemical Park, one of Germany’s biggest chemical clusters hosting plants of Dow Chemical and Shell among others, some makers say Russian gas should return quickly. Russia used to cover 60% of local needs, mainly through the Nord Stream pipeline, which was blown up in 2022. “We are in a severe crisis and can’t wait,” said Christof Guenther, managing director of InfraLeuna, the operator of the park. He said the German chemical industry has cut jobs for five quarters in a row, something not seen for decades. “Reopening pipelines would reduce prices more than any current subsidy programmes,” he said. “It’s a taboo topic,” Guenther added, saying many colleagues agreed on the need to go back to Russian gas. Almost a third of Germans voted for Russia-friendly parties in the February federal election. In the state of Mecklenburg-Vorpommern, the east German region where the Nord Stream pipeline comes ashore after running from Russia under the Baltic Sea, 49% of Germans want a return to Russian gas supplies, a poll carried out by the Forsa institute found. “We need Russian gas, we need cheap energy – no matter where it comes from,” said Klaus Paur, managing director of Leuna-Harze, a mid-sized petrochemical maker at the Leuna Park. “We need Nord Stream 2 because we have to keep energy costs in check.” The industry wants the federal government to find cheap energy, said Daniel Keller, economy minister for the state of Brandenburg – home to the Schwedt refinery, co-owned by Russian oil firm Rosneft but held in German government trusteeship. “We can imagine resuming the intake or transport of Russian oil after peace is established in Ukraine,” Keller said. TRUMP FACTOR U.S. gas covered 16.7% of EU imports last year – behind Norway with 33.6% and Russia with 18.8%. Russia’s share will drop below 10% this year after Ukraine shut pipelines. The remaining flows are mainly LNG from Novatek. The EU is preparing to buy more U.S. LNG as Trump wants Europe to lower its trade surplus with the United States. “For sure, we will need more LNG,” EU trade commissioner Maros Sefcovic said last week. The tariff war has strengthened Europe’s concern about reliance on U.S. gas, said Tatiana Mitrova, a research fellow at Columbia University’s Centre on Global Energy Policy. “It’s becoming increasingly difficult to regard U.S. LNG as a neutral commodity: at a certain point it might become a geopolitical tool,” Mitrova added. If the trade war escalates, there is a small risk the United States could hold back on LNG exports, said Arne Lohmann Rasmussen, chief analyst at Global Risk Management. A senior EU diplomat, speaking on condition of anonymity, agreed, saying no one could rule out “that this leverage is used”. In the event U.S. domestic gas prices surge because of rising industrial and AI demand, the U.S. could curtail exports to all markets, Warren Patterson, head of commodities strategy at ING, said. In 2022, the EU set itself a non-binding goal to end Russian gas imports by 2027, but has twice delayed publishing plans on how. An EU Commission spokesperson declined to comment on the companies’ comments. ARBITRATION Several EU firms have opened arbitration cases against Gazprom for non-delivery of gas following the Ukraine war. Courts awarded Germany’s Uniper and Austria’s OMV 14 billion euros and 230 million euros respectively. Germany’s RWE has claimed 2 billion euros, while Engie and other firms have not disclosed their claim. Engie’s Holleaux said Kyiv could allow Russia to send gas via Ukraine to meet arbitration repayments as a starting point of resuming contractual relationships with Gazprom. “You (Gazprom) want to come back to the market? Very good, but we won’t sign a new contract if you don’t pay the award,” Holleaux said. The return of Russian gas worries Maxim Timchenko, the chief of DTEK, Ukraine’s private gas company, which