Goldman Sees Bullish Risk to $86/bbl Dec-23 Brent Forecast Post Cuts

The decisions by OPEC+ leaders Saudi Arabia and Russia to extend voluntary oil production cuts through to the year-end brings bullish risks to the bank’s $86/bbl Brent forecast for December 2023, the bank said in a note.

• The mechanical upside risk to the forecast from the 500kbpd cut extension for Q4 from Saudi Arabia is around +$2/bbl, Goldman said.
• OPEC is unlikely to pursue Brent prices well and sustainably above $100/bbl given its focus on medium-run stability, the bank said.
• In addition, the extended curbs highlight the risk to bank’s assumption that OPEC+ countries will in January reverse half of the 1.7mbpd cut that was announced in April 2023
• Under a bullish scenario — which is not Goldman’s base case — in which OPEC+ keeps the 2023 cuts in place through end-2024, and where Saudi Arabia raises output only gradually back to 10mbpd, $14/bbl would be added to forecast for Brent at $93/bbl in December 2024.
• Prior to the cut announcement yesterday, the bank forecasted a large deficit of 2.3mbpd in Q3.