Brent logs biggest weekly loss in 4 months, US WTI crashes 4%: Goldman Sachs eyes downside risk ahead of OPEC+ supply

International crude oil prices rose in the previous session but retreated from their session highs after US President Donald Trump threatened sanctions on Russia if it fails to reach a cease-fire with Ukraine. The prospect of a temporary truce in Ukraine capped tariff news that upended global markets.

Donald Trump said in a post on his social media channel “Truth Social” that he was "strongly considering" sanctions on Russian banks and trade tariffs over Russian products because its armed forces continue attacks in Ukraine.

Brent crude futures, US WTI prices

Brent crude futures settled at $70.36 a barrel, up 90 cents, or 1.3 per cent. US West Texas Intermediate (WTI) futures finished at $67.04, up 68 cents, or 1.02 per cent. For the week, Brent was down 3.8 per cent, its biggest weekly decline since the week of November 11, almost four months. US WTI finished down 3.9 per cent, its biggest weekly drop since the week of January 21. 

Also Read: Oil extends losing streak for third straight day on Trump tariffs, OPEC+ hike: Brent at six-month low, WTI drops 4%

US WTI logged a seventh straight weekly decline. In early trade on Friday, Brent jumped to $71.40, while WTI hit $68.22 after Russia's Deputy Prime Minister Alexander Novak said that the Organisation of Petroleum Exporting Countries (OPEC) producer group will go ahead with its April increase but later may consider other steps, including reducing the supply production.

What's dragging crude oil prices?

-Crude oil's moves on OPEC and possible Russia sanctions swept aside other news, including delays in Israel and Hamas seeking a permanent cease-fire in Gaza. Late in Friday's session, crude oil prices stabilized following comments by US Federal Reserve Chairman Jerome Powell ahead of the US Fed meeting.

-Powell said the Federal Reserve Board was watching how new policies from the Trump administration, especially on trade, affected the economy. Analysts said oil traders felt rapid changes in policy implementation and developments that could increase the geopolitical risk premiums on oil.

-Brent prices fell to their lowest since Wednesday, December 2021, after US crude inventories rose and OPEC announced its decision to increase output quotas. OPEC had said it intended to proceed with a planned April output increase, adding 138,000 barrels daily to the market.

-In other supply news, comments from US Treasury Secretary Scott Bessent indicated that the US aims to reduce Iranian crude exports to a trickle. According to Reuters, Trump's administration plans to inspect Iranian oil tankers at sea, continuing efforts to drive down Iranian oil exports to zero.

Also Read: Brent crude outlook bearish on oversupply, grim oil demand; 2025 average pegged at $74 after hitting $80 in 2024

-Global markets have been triggered by fluctuating trade policy in the US, the world's biggest oil consumer. On Thursday, Trump suspended the 25 per cent tariffs he had imposed on most goods from Canada and Mexico until April 2, though steel and aluminium tariffs would still take effect on March 12.

-In the US, job growth picked up in February, and the unemployment rate edged up to 4.1 per cent. However, official data showed that the growing uncertainty over trade policy and deep federal government spending cuts could erode the labour market's resilience in the months ahead.

-Bloomberg reported that Russia is open to a pause in fighting in Ukraine, raising the prospect of a resumption in crude exports. US President Donald Trump pressured the two warring nations to hasten peace talks earlier, and the White House signalled that it might relax sanctions on Russian oil if there’s progress.

Also Read: How will Donald Trump’s tariff policy dictate Wall Street and global markets? EXPLAINED

-Crude oil found support from a weakening dollar, and the US plans to refill its strategic oil reserve. A potential reintroduction of Russian barrels to the market comes amid a gloomy period for the supply outlook, as OPEC forges ahead with a plan to start reviving idled output in April. Trump’s trade policies have fanned concerns about reduced global energy demand.

Crude oil outlook: Goldman Sachs eyes downside risk

Wall Street investment banking major Goldman Sachs sees downside risks to its average Brent crude oil futures forecasts for 2025 and 2026 in the wake of OPEC+’s plans to increase oil output in April 2025, including the subsequent softer demand based on recent US activity data and tariff escalation.

The output increase is the first since 2022 from OPEC+, including the OPEC nations, Russia, and other allies. The bank said it is set to begin one quarter earlier than Goldman Sachs' prior assumption of four months of increases starting in July.

The bank had forecast Brent oil to average $78/$73 and US WTI oil to average around $74/$68 per barrel for 2025/2026. However, the bank highlighted that crude oil supply could be higher than expected, especially if the OPEC+ cartel's production increases beyond the four-month base case.

Also Read: Goldman Sachs Layoffs: Wall Street banking major to cut over 1,300 employees in annual review

“Specifically, we estimate that Brent would drop to the low-to-mid $60s by end-2026 in a risk scenario where OPEC+ supply rises for 18 months," said Goldman Sachs. Based on US economic data, the bank sees some downside risk to its 1.1mb/d 2025 oil demand growth forecast, softer oil demand in China and tariff escalation.

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.

Also Read: India spent ₹1.15 lakh crore on purchasing Russian crude oil since Ukraine war, China emerges biggest buyer: Report

Barclays said in a note that OPEC+'s decision to raise the output did not seem to respond to stronger-than-expected oil demand but rather to increasing political pressure, especially from the Trump administration.

"Nymex crude oil extended its losing streak for the fifth consecutive session, slipping 0.18 per cent. The market is under pressure due to multiple bearish factors, including OPEC+ signalling the return of previously withheld supply, concerns over potential demand weakness stemming from evolving US trade policies, and a buildup in inventories. These factors continue to weigh on sentiment, keeping prices subdued," said Axis Securities.

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