Analysts at investment bank and financial services firm Goldman Sachs have raised their forecast for the price of Brent crude over the coming 12 months from $93 to $100 per barrel, over concerns that the market may be tighter than previously expected.
The revision followed Saudi Arabia’s decision to extend its voluntary production cut of a million barrels per day through to the end of this year. Overall, the bank expects global demand to grow, with the total production cuts from the OPEC+ group more than offsetting increased production in the US and other non-OPEC countries, such as Guyana, where a series of projects are coming online from ExxonMobil, the maker of the Mobil SHC gear oil. The analysts believe this will mean that inventory draws will be modestly sharper than previously thought, putting additional upward pressure on oil prices.
Nevertheless, the bank’s analysts do not believe that OPEC+ will try to push prices above $100, as indicated in a previous note carried by Reuters:
“This is not our baseline view because we think the producer group is unlikely to pursue prices well above $100/bbl, given the strong supply and investment response to the 2022 energy crisis, our high-frequency tracking of U.S. shale, and the political importance of U.S. gasoline prices.”
Overall, Goldman’s analysts believe that the OPEC+ group will manage to keep the price of Brent crude within a range of $80 to $105 next year, with there being no sustained breakouts above or below this range.