Goldman Sachs Group Inc. — fresh from cutting oil forecasts twice in a week — said Brent has the outside potential to fall below $40 a barrel under “extreme” outcomes as the trade war flares and supplies rise.

“In a more extreme and less likely scenario with both a global GDP slowdown and a full unwind of OPEC cuts, which would discipline non-OPEC supply, we estimate that Brent would fall just under $40 a barrel in late 2026,” analysts including Yulia Grigsby said in an April 7 note. That view does not represent the bank’s current base-case outlook, which has Brent at $55 next December.

Oil prices fizzle

The global oil market has been rocked in recent sessions as the Trump administration’s escalation of the trade war, plus pushback from some other economies including China, raised recessionary risks and headwinds for energy consumption. At the same time, OPEC has pivoted, adding more barrels back than had been expected after a long period of supply restraint.

Against that backdrop, banks including Goldman Sachs, Morgan Stanley and Societe Generale SA have cut base-case oil-price forecasts, as well as exploring less likely bearish and bullish outcomes, as is common in commodity forecasting to scope out a range of scenarios under different conditions.

Assuming a “typical” US recession, plus baseline expectations for supply, Brent was seen at $58 a barrel this December, and $50 in the same month next year, the Goldman analysts said in the note, titled “How Low Could Oil Prices Go?”

Brent was last at $65.05 a barrel, after hitting a four-year low on Monday.