2023-09-07 01:34:59
(CNN) — Goldman Sachs has warned clients that there is a “risk” that if Russia and Saudi Arabia leave oil supply cuts unchanged, oil prices will rise into triple-digit territory by next year.
The surprising announcement by Russia and Saudi Arabia raised Brent crude above $91 a barrel for the first time in 10 months.
Goldman Sachs said, in a note, on Tuesday, that it sees a “risk” that the price of Brent crude will reach $86 in December and $93 at the end of next year.
The bank predicted two scenarios, the first being that Saudi oil supplies will be 500,000 barrels per day less than they were in the past, and this alone would add two dollars to the price of a barrel of oil.
According to the second scenario, Goldman Sachs said that extending supply cuts “highlights the risks” involved in the bank’s assumption that OPEC+ countries will in January not cancel half of the 1.7 million barrels per day cut announced in April. the past.
In this scenario, Brent crude prices are likely to rise to $107 per barrel in December 2024, the bank said.
Goldman Sachs stressed that this is not the bank’s “core vision” because OPEC+ “is unlikely to track Brent prices well and sustainably above $100 a barrel given its focus on medium-term stability. In other words, such a strategy could backfire.” “.
Although higher oil prices will help Saudi Arabia balance its budget and Russia fund its war machine, Goldman Sachs said oil prices in triple digits could increase supply from US shale producers and inspire more investment in clean energy.
The other reason why OPEC+ does not want to buy oil at $100, according to Goldman Sachs, is the “political importance of US gasoline prices”.
In response to a question about Russian and Saudi supply cuts, Wednesday, US National Security Adviser Jake Sullivan told reporters that US President Joe Biden is focused on “trying to do everything to be able to get lower prices for consumers.”
“Ultimately, the thing we stand for is providing a stable and efficient supply of energy to global markets so that we can actually provide convenience to consumers,” he added.
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