Daan Struyven, Goldman Sachs co-head of global commodities research, joins 'Squawk Box' to discuss the state of the oil market, why oil prices are likely to fall through 2026, and more.

Goldman Sachs' Daan Struyven expects oil prices to decline further through 2026, citing a significant supply surplus driven by increased production and rising inventories. The bank forecasts WTI crude averaging $52 in 2025 and anticipates the current supply wave will be the last before the market rebalances in 2027.

Struyven notes that long-term supply growth will depend on OPEC's spare capacity and investments, with demand projected to grow through 2040. He also highlights that lower prices could modestly boost the U.S. economy through increased consumer spending, while OPEC members like Saudi Arabia are positioned to withstand a period of lower prices.

Expect oil prices to decline further in 2026, says Daan Struyven

Goldman Sachs says the oil price is likely to fall through 2026 as rising production is creating a surplus. Join us right now is Dan Struve again. I've always mispronounced his name every time you come on. I apologize. It kills me. Goldman Sachs is co-head of Global Commodities Research. Good morning to you. We're looking at WTI crude right now at fifty nine ninety six. And I'm you think this is coming down a lot. We have double T.I. declining to a 50 to average for for next year. Okay. Brand mid 50s T.I. low low 50s. We think 2026 will sort of be the last year of this big supply wave. The oil market is going through. And then we think in twenty seven the market will will rebalance and rebalance to what. So we eventually think that after years of low investment with demand growing through 2040 and with U.S. shale maturing that eventually by late 28 or so you should go back to Brent 80 and T.I. 76. But right now the focus is very much on the big increases in stocks in oil inventories. We're seeing at a pretty big pace two million barrels per day over the last 90 days. But we think this is sort of the last big supply wave. The oil market has to work through. So if you're right nobody should be buying oil right now. We think that there will be an attractive opportunity down the road. Now right now we actually recommend to investors to express our view that prices will decline further. Right. It's short short positions. So the question though is you're suggesting people actually short oil. At what point. I mean timing is a very tricky business whether it's equities or frankly the oil business or maybe maybe it's different in your business. Is it much easier to time commodities you think. So I think that commodities are more spot spot assets. I typically find that oil prices sort of run perhaps two quarters ahead of inventories data. But equities especially for instance the tech stocks can easily look decades decades ahead. So that's why we're laser focused on the inventories data which support a view that the market is now in a large surplus that we estimate at two million barrels per day for next year on average. And if you think therefore that that WTI and Brent's going to drop precipitously or precipitously but basically 10 bucks or eight bucks. Yes. That should have a real impact and a boost to the economy. The broader economy. We think the net impact on U.S. growth would be modestly positive because the boost to consumer spending from higher real disposal incomes should outweigh the slowdown in U.S. shale capex in U.S. shale production which eventually will help to rebalance the oil market. Well that's what I was going to say. So where is this supply going to come from long term in the long term. Supply growth we think will mostly come in the long term from from OPEC which has spare capacity and is investing in expanding its production potential including natural gas liquids and some modest growth from U.S. shale also in the early 2030s. But that would require Brent around 80 or so. And we think that's necessary if demand keeps growing through 2040 which is our base case. OK. We have MBS in town in Washington with the president. Where does Saudi what Saudis play at all in all of this. And I ask partially because you know they went down the whole road a couple of years ago of you know they're going to build Neom. They're trying to diversify their entire economy away from fossil fuels. How quickly is that ever really going to happen. And you think that's that whole idea has shifted. Yes. So we think that Saudi Arabia has has raised production this year for several strategic reasons to increase the cohesion within the group to make sure everybody is contributing to stabilizing the markets. And we also think that Saudi Arabia by bringing back to the barrels to the market has reduced this perception in the oil market. There is plenty of spare capacity which had been weighing on all the prices. And finally if the market goes lower from a price perspective in twenty five and twenty six this should also slow down non-OPEC capex and support support demand more broadly. We think that core OPEC leaders like Saudi Arabia you can deal with a period of lower oil prices high reserves borrowing capacity. And to your point they can reprioritize capex into the tech sector with big ambitions.

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