Goldman: Oil Prices Could Hit $107 on OPEC Cuts

Emmanuel Addeh in Abuja

If Russia and Saudi Arabia maintain their production cuts, oil prices could hit $107 next year, Goldman Sachs, has said, but noted that the Organisation of Petroleum Exporting Countries (OPEC) may not pursue prices above $100.

While Brent crude, Nigeria’s benchmark currently hovers around the $90 mark, Saudi Arabia recently extended its 1 million barrels per day (bpd) cut through December 2023.

The OPEC producer said the move reinforces the precautionary efforts made by the organisation and its allies, with the aim of supporting the stability and balance of oil markets.

 The cuts will see the Saudis pump 9 million bpd until the end of the year, but will be reviewed monthly to consider deepening the cut or increasing production, depending on market dynamics.

Russia also extended its 300,000 bpd export cut into December, with the option to review every month and potentially deepen the cuts or increase supply, according to market conditions.

Following the announcements, Goldman Sachs Commodities Research wrote in a note that the extended cuts increase the upside risks for oil prices.

“Consider a bullish scenario where OPEC+ keeps the 2023 cuts…fully in place through end-2024 and where Saudi Arabia only gradually raises production,” Goldman’s analysts wrote, as carried by CNN and quoted by oilprice.com

This bullish scenario may push oil prices up to $107 per barrel in December 2024, the Wall Street bank said, but cautioned that this is not its base-case scenario.