TLDR
- Crude markets declined more than 1% Monday following progress in US-Iran diplomatic discussions that reduced regional conflict concerns
- President Trump escalated worldwide tariffs to 15% from 10% following Supreme Court rejection of his initial trade policy
- Washington and Tehran scheduled their third round of nuclear negotiations for Thursday in Geneva
- Goldman Sachs upgraded its fourth quarter 2026 Brent projection by $6 to $60/barrel, pointing to depleted OECD stockpiles
- The investment bank anticipates a worldwide crude oversupply of 2.3 million barrels daily in 2026, with potential downward pressure if Iranian or Russian sanctions are relaxed
Crude markets experienced a decline Monday as energy traders digested two significant concurrent developments: escalating American trade barriers and diplomatic advancement on Iran’s nuclear program.
Brent benchmark crude retreated 73 cents, settling at $71.03 per barrel. The US West Texas Intermediate marker decreased 75 cents to $65.73.
The decline followed President Trump’s declaration that he would increase import duties on all goods entering the United States to 15% from the previous 10% level. After the Supreme Court invalidated his initial tariff framework, the administration invoked authority under the International Emergency Economic Powers Act.
The tariff escalation sparked concerns about decelerating worldwide economic expansion and diminished petroleum consumption. Market observers indicated the announcement prompted broad risk-off sentiment throughout financial markets, pressuring crude alongside American stock index futures and gold.
Middle East Diplomacy Weighs on Prices
Tehran and Washington have scheduled their third round of nuclear program discussions for Thursday in Geneva. Oman’s Foreign Minister made the announcement Sunday.
The diplomatic momentum helped diminish concerns about potential military conflict across the Middle East. Both Brent and WTI benchmarks had climbed over 5% during the previous week amid those escalating tensions.
A high-ranking Iranian diplomat informed Reuters that the Islamic Republic is prepared to offer compromises regarding its nuclear activities. Tehran seeks sanctions removal and international acknowledgment of its uranium enrichment rights in exchange.
The diplomatic thaw contributed to the price retreat. Market analysts observed that with a potential agreement emerging, the geopolitical risk premium embedded in petroleum valuations began dissipating.
Goldman Upgrades Long-Term Price Outlook
Goldman Sachs revised upward its fourth quarter 2026 crude price projections Sunday. The financial institution now forecasts Brent at $60 and WTI at $56 for that timeframe, representing a $6 increase from previous estimates.
The bank attributed the revision primarily to diminished OECD inventory levels. For calendar year 2026, Goldman now projects Brent averaging $64, elevated from $56, while WTI is expected to average $60, up from $52.
Goldman maintained its 2026 oversupply projection at 2.3 million barrels daily. This calculation assumes no significant supply interruptions and no Russia-Ukraine peace settlement.
The investment firm reduced supply projections for Kazakhstan, Venezuela, Iran, and Iraq following production shortfalls against targets. Conversely, it elevated supply expectations for American producers and principal OPEC members.
Goldman anticipates OPEC+ will begin incrementally increasing production during the second quarter of 2026, as OECD stockpiles have failed to accumulate as previously projected.
The bank identified downside exposure of $5 for Brent and $8 for WTI should sanctions relief for Iran or Russia accelerate supply expansion.
Goldman forecasts Brent and WTI averaging $65 and $61 respectively throughout 2027, climbing to $70 and $66 by December 2027.
