Excess fluid sits on the rim of a barrel of oil based lubricant at Rock Oil Ltd.'s factory in Warrington, U.K. (Photographer: Chris Ratcliffe/Bloomberg)
(Bloomberg) -- The decisions by OPEC+ leaders Saudi Arabia and Russia to extend voluntary oil production cuts through to the year-end brings bullish risks to crude's outlook, according to Goldman Sachs Group Inc.
- The moves reflect the group's “unusually high pricing power,” analysts Daan Struyven, Callum Bruce and Yulia Zhestkova Grigsby said in a Sept. 5 note
- There's ~$2/bbl upside risk to Goldman's Brent December 2023 forecast of $86/bbl from a 500kb/d miss in Saudi supply in 4Q relative to the bank's estimated balances
- In addition, the extended curbs highlight the risk to bank's assumption that OPEC+ countries will in January reverse half of the 1.7m b/d cut that was announced in April 2023
- Under a bullish scenario — which is not Goldman's base case — in which OPEC+ keeps the 2023 cuts in place through end-2024, and where Saudi Arabia raises output only gradually back to 10m b/d, $14/bbl would be added to forecast for Brent at $93/bbl in Dec. 2024
- Still, the producer group is “unlikely to pursue Brent prices well and sustainably above $100/bbl given its focus on medium-run stability”
- READ: Oil Tests November High After OPEC+ Leaders Extend Cuts
- READ: Saudi Oil-Cut Extension Sets Up Much Tighter Finale for 2023
- READ: Goldman Says Oil Market Has ‘Large Deficit' on OPEC+ Cuts
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.
Also Read | Layoffs Are Rising In Tech, But These Skills Are Helping People Unlock Better Pay
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
