The global oil market has been rocked in recent sessions as the Trump administration’s escalation of the trade war.

Goldman Sachs Group — fresh from cutting oil forecasts twice in a week — said Brent has the outside potential to fall below US$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 US$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 US$55 next December.

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 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 US$58 a barrel this December, and US$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 US$65.05 a barrel, after hitting a four-year low on Monday.