Goldman Sachs raises its Brent price forecast to $95 a barrel, ‎after OPEC+ production cut

Goldman Sachs raised its forecast for Brent crude futures prices after the sudden announcement by OPEC + regarding the adoption of further production cuts.

According to “Reuters”, the bank’s analysts said in a note on Sunday that expectations for the price of Brent crude for December 2023 increased by five dollars to $95 a barrel, while expectations for December 2024 were raised by three dollars to $100 a barrel.

The cut in price forecasts came as the bank lowered its forecast for OPEC+ production, which includes the Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russia, by 1.1 million barrels per day by the end of 2023.

Brent crude futures rose to the highest level in almost a month, more than $86 a barrel, at the beginning of Monday’s trading, after the OPEC + announcement.

“Today’s sudden (production) cut is consistent with the new OPEC+ approach to act proactively, because it can do so without incurring significant losses in its market share,” the bank said.

He added that while the move was surprising, the decision reflects important economic and potential political considerations

The bank estimates that reducing production could provide a seven percent increase in oil prices, which would contribute to increasing the revenues of Saudi Arabia and OPEC +.

The bank indicated that the OPEC + decision also came after the United States and France announced the release of stocks from their strategic petroleum reserves.

He said, “The refusal to refill the US strategic petroleum reserve in fiscal year 2023, despite the (US standard) West Texas Intermediate (US standard) crude reaching low levels that were described as sufficient for refilling, may have contributed to OPEC +’s decision to cut as well.” “