TLDR
- Crude oil declined more than 1% Monday following diplomatic progress in US-Iran nuclear negotiations
- President Trump escalated tariffs on all imports to 15% from 10% following Supreme Court intervention on his original plan
- US and Iran will hold a third negotiation round Thursday in Geneva
- Goldman Sachs upgraded its 2026 Brent price target to $64 per barrel from a previous $56 estimate
- Goldman projects a 2.3 million barrel daily oversupply in 2026, warning of potential downside if sanctions ease on Iran or Russia
Energy markets experienced a notable decline exceeding 1% Monday as traders digested dual developments: escalating trade tensions through expanded tariffs and diplomatic breakthrough in nuclear negotiations with Iran.
Brent crude settled 73 cents lower at $71.03 per barrel. US West Texas Intermediate decreased 75 cents, closing at $65.73 per barrel.
The downward pressure emerged following President Trump’s announcement to increase import tariffs across all US goods from 10% to 15%. This decision came after the Supreme Court invalidated his initial tariff framework. Trump invoked the International Emergency Economic Powers Act to implement the new rate — reaching the statutory maximum permitted.
Market participants expressed concern that elevated tariffs would dampen worldwide economic expansion and curtail petroleum consumption. The development simultaneously impacted crude oil, US stock futures, and precious metals as capital flowed away from higher-risk investments.
Iranian Diplomatic Progress Reduces Geopolitical Risk Premium
A third negotiation session between US and Iranian officials is scheduled for Thursday in Geneva. Oman’s Foreign Minister provided confirmation of the meeting Sunday.
The previous week saw both Brent and WTI surge over 5% on heightened concerns regarding potential military escalation with Iran. Monday’s diplomatic advancement helped reverse those gains.
A high-ranking Iranian representative informed Reuters that Tehran demonstrates willingness to compromise on nuclear programme elements. Iran seeks sanctions removal and acknowledgment of uranium enrichment rights in exchange.
As the prospect of diplomatic resolution strengthened, the geopolitical risk premium previously embedded in oil prices began dissipating. Market analysts indicated that crude’s trajectory remains uncertain, though elevated volatility should persist.
Goldman Sachs Revises Crude Price Projections Upward
Goldman Sachs increased its petroleum price projections in research published Sunday. The firm now anticipates Brent averaging $64 per barrel throughout 2026, representing an upgrade from its prior $56 forecast. WTI projections rose to $60 from $52.
For the fourth quarter of 2026 particularly, Goldman elevated its Brent estimate by $6 to $60 and WTI by $6 to $56. The investment bank attributed the revision primarily to reduced OECD inventory levels.
Goldman maintained its 2026 surplus projection at 2.3 million barrels daily, predicated on assumptions of no significant supply disruptions and no Russia-Ukraine peace agreement.
The firm reduced supply expectations for Kazakhstan, Venezuela, Iran, and Iraq following shortfalls against production targets. Conversely, it increased forecasts for Americas production and core OPEC members possessing spare capacity.
Goldman anticipates OPEC+ will commence gradual output increases during Q2 2026. The bank also highlighted downside risk scenarios of $5 for Brent and $8 for WTI should sanctions relief for Iran or Russia release additional supply.
Goldman projects Brent and WTI reaching $70 and $66 respectively by December 2027.
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