That announcement lifted Brent crude oil above $91 a barrel for the first time in 10 months…reports Asian Lite News
Oil prices could climb well into triple-digit territory by next year if Russia and Saudi Arabia do not unwind their aggressive supply cuts, warns investment bank Goldman Sachs.
The Wall Street bank had already factored in the possibility of high oil prices long before Russia and Saudi Arabia announced, earlier this week, that they were extending production cuts through the end of 2023, CNN reported.
That announcement lifted Brent crude oil above $91 a barrel for the first time in 10 months.
Brent crude is the world’s oil price benchmark and is produced in the North Sea.
Goldman Sachs had forecast Brent oil to be $86 in December and $93 at the end of 2024.
Now, the bank says it sees “two bullish risks” to its prediction.
First, Goldman Sachs expects Saudi oil supply to be 500,000 barrels per day smaller than previously anticipated. That alone should add $2 to the per-barrel price of oil.
Secondly, the bank warned that some of its assumptions for oil production may be incorrect if the OPEC+ cut extensions continue.
It had expected that in January the countries would bring back half of the 1.7 million barrel per day cut that was announced in April, CNN reported.
Now the bank is floating the possibility of an even longer extension.
With Chinese manufacturing data finally bouncing back to growth in August, the bearish sentiment is gaining the upper hand in oil markets right now.
In the meantime, Russian seaborne crude and product exports fell to their lowest since September 2022 as strong domestic demand in the summer kept volumes available for external markets capped, the report said.
Delivering on their promise to cut exports by 500,000 bpd in July-August, Russian flows to India decreased by 30 per cent to 1.5 million bpd, just as Urals has been trading above the oil price cap threshold of $60 per barrel since early July, the Oil Price report said.