Goldman Sachs is maintaining its predictions for Brent crude prices, expecting an average of $64 per barrel in Q4 2025 and $56 in 2026. They are concerned about rising risks to oil demand due to increasing U.S. tariffs, possible new trade actions, and weaker U.S. economic data. Goldman pointed out that signs of slower U.S. economic growth might raise the likelihood of a recession in the next year. This situation could affect their expectation of global oil demand growing by 800,000 barrels per day each year in 2025 and 2026.

Geopolitical Pressures on Oil Supply

On the supply side, geopolitical tensions surrounding sanctioned oil from Russia and Iran could keep prices high as global spare production capacity returns to normal faster than anticipated. However, Goldman believes there is minimal risk of significant supply disruptions from Russia, thanks to ongoing demand from China and India, although Indian refiners have paused some purchases due to shrinking discounts and U.S. pressures. OPEC+ decided to increase output by 547,000 barrels per day in September to reclaim lost market share. Goldman expects the group to maintain stable production beyond September since stockpiles in OECD countries are rising and seasonal demand is decreasing. With the forecast indicating Brent crude averaging $64 in Q4, it appears the market has a bearish outlook influenced by weakening economic signals. The growing chance of a U.S. recession poses a serious challenge for oil demand. The latest report from the Bureau of Economic Analysis revealed U.S. GDP growth slowing to just 0.9% in Q2 2025, raising concerns that demand growth may not reach the anticipated 800,000 barrels per day.

Strategic Moves for Traders

For traders, this suggests that implementing strategies to guard against falling prices may be wise in the coming weeks. Recent data from the Energy Information Administration in late July 2025 showed an unexpected rise in U.S. crude inventories, which have exceeded the five-year average for this time of year. This inventory increase, along with the scheduled OPEC+ output rise of 547,000 barrels per day in September, supports a case for declining near-month prices. Given these factors, selling call options or setting up bear call spreads on Brent futures for late Q4 2025 appears appealing. Establishing these positions with strike prices around $65-$70 per barrel enables traders to profit from stagnant or slightly declining prices. This aligns with the belief that a significant price surge is unlikely given the demand forecast. However, geopolitical risks related to sanctioned Russian and Iranian oil should not be overlooked, as these create a support level for prices. The CBOE Crude Oil Volatility Index (OVX) has been hovering near 35, which seems to underestimate the risk of a severe economic downturn or a sudden supply disruption. Consequently, buying long-term put options could be an effective safeguard against a more pronounced price drop that could result from a recession. It’s important to remember the 2008 financial crisis when oil prices plummeted from over $140 to below $40 in just months as demand vanished almost overnight. While the current slowdown isn’t as drastic, it highlights how quickly demand destruction can outpace supply concerns. This historical context supports adopting a position for lower prices, despite ongoing supply risks. Create your live VT Markets account and start trading now.

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