After three consecutive days of rising oil prices, Goldman Sachs and Morgan Stanley released pessimistic reports

Wall Street is beginning to take a pessimistic view of next year's oil outlook, as Goldman Sachs and Morgan Stanley have lowered their oil price forecasts due to increased global supply, including potential supply from OPEC+.

These two banks currently expect that the average price of global benchmark Brent crude oil in 2025 will be below $80 per barrel, with Goldman Sachs lowering its oil price forecast to $77 per barrel and Morgan Stanley expecting Brent futures prices to range between $75 and $78. Both anticipate an oversupply in the oil market, leading to a downward trend in oil prices over the next 12 months.

Analysts at Goldman Sachs, including Daan Struyven, suggest that OPEC+ may decide to reverse voluntary production cuts, aiming to "strategically constrain supply from non-OPEC oil-producing countries," while also warning that in various scenarios, oil prices may fall below their revised forecasts.

On Tuesday, after three consecutive days of gains, oil prices retreated slightly as the threat of disruptions to Libyan supply offset by uncertain demand prospects. Brent crude oil rose by 7% over three days, briefly reaching $81 per barrel, while WTI crude oil approached $77 per barrel before pulling back.

Earlier, the eastern government of Libya announced that all oil fields, ports, and facilities were facing force majeure, halting all oil production and exports. Meanwhile, the eastern government of Libya is in a struggle with opposition forces in Tripoli for control of the central bank and oil wealth of this OPEC member country.

Analysts at RBC Capital Markets LLC, including Helima Croft, stated in a report, "Libya is once again at risk of losing all eastern oil exports." They noted that if all eastern oil fields were to close, the country would be left with only one major field in operation.

Oil prices have been falling in recent months, erasing all gains made earlier this year, as investors worry about slowing Asian demand, increasing supply from outside OPEC+, and plans by the organization to ease production cuts. While the organization has been willing to support prices by reducing oil supply, sacrificing market share, preliminary plans to restore production may change this stance.

Analysts at Morgan Stanley, including Martijn Rats and Charlotte Firkins, stated in a report, "The oil market remains in a state of supply shortage, but may be nearing the peak of a long-term shortage." They indicated that by the fourth quarter of 2024, "the market may rebalance, and we expect an oversupply in 2025."

Before the threat to Libyan oil exports, clashes between Israeli and Iranian-backed Hezbollah over the weekend reignited concerns that this would impact physical exports from the Middle East. While both sides have stated that they have currently ceased military actions, the market remains vigilant for signs of further impact from the Gaza conflict Goldman Sachs has conducted several scenario analyses on the future trend of oil prices. The bank stated that if Asian crude oil demand remains stable, Brent crude prices could fall to $60 per barrel; if the United States imposes a 10% comprehensive tariff on commodity imports, Brent crude prices could fall to $63 per barrel; if OPEC completely reverses its additional production cut of 2.2 million barrels per day until September 2025, Brent crude prices could fall to $61 per barrel