Oil could spill below $40 a barrel in an 'extreme' scenario, Goldman Sachs warns

After cutting oil forecasts two times this week, investment banking major Goldman Sachs said that Brent, in an "extreme scenario", can fall below $40 per barrel.

"In a more extreme and less likely scenario with both a global GDP slowdown and a full unwind of OPEC+ cuts, which would discipline non-OPEC supply, we estimate that Brent would fall just under $40 a barrel in late 2026," Goldman Sachs analysts said.

This assessment does not represent the financial services provider's current base case outlook of $55 per barrel for Brent next December.

"Oil prices would likely exceed our forecast if the Administration were to reverse tariffs sharply and deliver a reassuring message to markets, consumers, and businesses," Goldman Sachs said.

Brent crude declined 0.23% to $64.07 on Tuesday, while West Texas Intermediate (WTI) fell 0.16% to $60.60.

On the Multi Commodity Exchange (MCX), crude oil for May delivery eased ₹52, or 0.98%, to ₹5,245 per barrel.

According to analysts, prices were affected due to participants trimming their holdings due to weak demand in the overseas market.

Meanwhile, benchmark indices are trading in green. NIFTY rose 2.18% to 22,643, while SENSEX climbed 1,527 points to 74,667.

In the NIFTY50 space, Jio Financial Services, Shriram Finance, Titan, Zomato, L&T, Bharat Electronics Ltd, Adani Enterprises, Eicher Motors, and Infosys were the top gainers.

The S&P 500 index ended 0.2% lower, while the Dow Jones Industrial Average descended 0.9%. The Nasdaq composite index closed 0.1% higher.

Intraday, the Dow Jones shed up to 1,700 points, while the S&P 500 contracted 4.7%.

Hong Kong's Hang Seng, Japan's Nikkei 225, and South Korea's KOSPI indices advanced 1.49%, 5.68%, and 0.26%, respectively.

The risk in global markets comes amid US President Donald Trump threatening an extra 50% tariff on China while being ready to negotiate tariffs with other countries.