Most pessimistic in nearly a decade! Goldman Sachs: Geopolitical factors are putting pressure on in the oversupply situation, nearly 60% of institutional investors are bearish on crude oil.

A survey conducted by Goldman Sachs Group, Inc. found that, as signs of a global oversupply of crude oil become increasingly apparent, political factors are driving institutional investors to a level of bearishness on oil nearing the most extreme levels in the past decade. The survey results released by Goldman Sachs Group, Inc. on Thursday showed that over 59% of the more than 1,000 surveyed clients across multiple asset classes expressed a bearish or slightly bearish view on oil. This sentiment level almost touched the historical low point in the monthly data set traced back to January 2016. The only time investors were slightly more pessimistic about oil than currently was last April when U.S. President Trump threatened to impose high tariffs on American trade partners. Furthermore, the survey also revealed that the proportion of institutional investors who consider oil their most preferred short-selling commodity reached a historical high. This further exacerbates the overall bearish sentiment. Due to the increase in supply from OPEC+ and its competitors, coupled with a slowdown in global demand growth, oil prices have fallen by nearly 20% cumulatively by 2025, marking the largest annual decline since 2020. The outlook for oil prices in 2026 remains uncertain. Although OPEC+ confirmed over the weekend that it would maintain its current production policy stable until the first quarter of 2026, the market generally believes that this year will present a significant oversupply of crude oil situation if demand fails to recover significantly. According to the average forecasts of Bank of America Corp, Citigroup, Goldman Sachs Group, Inc., JPMorgan, and Morgan Stanley, the current trading price of Brent crude oil futures, close to $61/barrel, is expected to further decline to around $59/barrel in 2026. Following Trump's "decapitation-style" military action against Venezuela over the weekend and the forced arrest of Venezuelan President Maduro, he called on U.S. oil companies such as Exxon Mobil Corporation, Chevron Corporation, and ConocoPhillips to invest billions of dollars to rebuild Venezuela's energy industry. Venezuela has the world's largest proven oil reserves, totaling 303 billion barrels. If these U.S. Energy Corp. giants respond to Trump's call to invest billions of dollars in revitalizing the country's oil production, it could have a bearish impact on the future oil market. In the medium to long term, if a U.S.-backed pro-American regime successfully comes to power, U.S. oil companies are expected to reenter the Venezuelan market, increase exploration and development efforts in local oil fields, and invest in the repair of port facilities, potentially adding 3 million barrels/day to the country's oil export volume, thereby restraining long-term oil price increases. David Goldwyn, a former senior energy official at the U.S. State Department during the Obama administration and now an industry consultant for U.S. Energy Corp., said, "If there's one thing Venezuela's future will do to the market, it's create bearish pressure on the market, because Venezuela's output has really nowhere to go but up." Saul Kavonic, energy research director at MST Financial, estimates that if a new government in Venezuela in the future can lift sanctions and attract foreign investors back, the country's oil export volume could reach close to 3 million barrels in the medium term. It is reported that the Trump administration is planning a far-reaching action with the aim of dominating the Venezuelan oil industry in the coming years. These planned actions include the U.S. exerting some degree of control over the Venezuelan state oil company (PDVSA), acquiring and selling most of its oil production. Including reserves controlled by the U.S. and companies in other countries, this move could essentially put the U.S. in control of most of the oil reserves in the Western Hemisphere. Trump has informed his aides that he believes this action will help push oil prices down to $50/barrel. Chris Wright, the minister of U.S. Energy Corp., also stated that the United States will "indefinitely" control the sale of Venezuelan oil. He also said the current U.S. goal is to stabilize and grow Venezuelan oil production by providing heavy crude diluents, spare parts, equipment, and services. He added that the U.S. will create conditions for large U.S. oil companies to enter Venezuela, and the Trump administration is considering establishing a compensation mechanism for U.S. oil companies investing in Venezuela. However, he also stated that Venezuelan oil production could increase by tens of thousands of barrels in the next few years and that it will take billions of dollars and "quite a long time" to return to historical highs. It is worth noting that in the context of already abundant global oil supply, these U.S. oil companies may weigh whether it is necessary to invest billions of dollars in Venezuela. Additionally, who will come to power in Venezuela and the stability of the government are equally important questions for U.S. Energy Corp. giants. They also need to confirm the long-term stability of the legal and financial systems, as energy investments typically involve projects spanning 30 years. Another key issue is whether Venezuela could return to a regime similar to the Maduro era in the future and re-nationalize oil assets. Venezuela has nationalized its oil assets twice in history, resulting in heavy losses for U.S. oil companies, who fear facing similar risks again. Meanwhile, the prospect of an end to the Russia-Ukraine conflict should not be overlooked. If the Russia-Ukraine conflict ends, Western countries may ease sanctions on Russia, which could increase Russian oil supply and further exacerbate the oversupply situation.