March 4 (Reuters) - Goldman Sachs sees downside risks to its average Brent forecasts for 2025 and 2026 in the wake of OPEC+’s plans to increase oil output in April, including softer demand based on recent U.S. activity data and tariff escalation.
The output increase is the first since 2022 from OPEC+, which includes the Organization of the Petroleum Exporting Countries, plus Russia and other allies. It is set to begin one quarter earlier than Goldman Sachs' prior assumption of four months of increases starting in July, the bank said.
The bank had forecast Brent oil to average $78/$73 and U.S. West Texas Intermediate oil to average around $74/$68 per barrel for 2025/2026.
However, oil supply could be higher than expected, especially if OPEC+ production increases stretch beyond the four-month base case, the bank said in a Monday note.
“Specifically, we estimate that Brent would drop to the low-to-mid $60s by end-2026 in a risk scenario where OPEC8+ supply rises for 18 months," it added.
The bank also sees some downside risk to its 1.1m b/d 2025 oil demand growth forecast based on recent U.S. economic data, softer oil demand in China and tariff escalation.
The OPEC+ announcement caused oil prices to fall around 2% to a 12-week low on Monday.
Meanwhile, Citi Research noted that the producer group's decision was more bearish for oil prices than their base case of OPEC+ delaying the return of barrels through 2025, but directionally in line with its call for Brent to grind lower to $60-65 per barrel over the next 6-12 months.
Barclays said in a note that the decision by OPEC+ to ratchet up output did not seem to be in response to stronger-than-expected oil demand, but rather in response to increasing political pressure, especially from the Trump administration.
Separately, U.S. President Donald Trump's new 25% tariffs on imports from Mexico and Canada took effect on Tuesday, along with a doubling of duties on Chinese goods to 20%.
Goldman Sachs estimated that tariffs on Canada and Mexico oil imports into the U.S. or tariffs on all U.S. oil imports would not significantly affect WTI or Brent prices but would significantly reduce the producer price for tariffed ex-U.S. heavy crude oil and raise U.S. refined product prices, especially in coastal regions.
Reporting by Rahul Paswan, Anjana Anil, Anushree Mukherjee and Kavya Balaraman in Bengaluru; Editing by Muralikumar Anantharaman and Christina Fincher
