The agreement OPEC+ reached on Sunday is modestly bullish ahead of Goldman Sachs’ forecast that Brent will hit $80 a barrel this summer, the investment bank said in a note after the group agreed to add 400,000 bpd of production each month starting in August.
For months, Goldman Sachs has been calling for: $80 a barrel of oil this summer, pending a strong recovery in demand, despite expectations that Iranian oil could legitimately return to the market at some point, and despite the two-week stalemate within OPEC+ over how the group would proceed with its management of the oil supply.
Last week, Goldman Sachs repeated its price prediction of $80 for crude Brent, despite reports that Saudi Arabia and the United Arab Emirates (UAE) had reached an oil production deal that would extend the OPEC+ deal until the end of next year.
On Sundays, OPEC+ agreed to renew the deal from April 2020 until the end of December 2022 and to add 400,000 barrels per day (bpd) monthly from August 2021 and until the phasing out of all 5.8 million barrels the group currently holds from the market, in light of improving global oil demand. The group also provided higher base production levels not only to the UAE, but also to Saudi Arabia, Russia, Kuwait and Iraq from May 2022.
“The agreement had two clear focus points: a moderate increase in output that will keep the market short in the coming months, as well as guidance for higher capacity that will be needed in the coming years given growing underinvestment,” Goldman Sachs said. said in a note, as carried by Reuters.
The deal OPEC+ reached is an “upside” of $2 a barrel from Goldman’s call of $80 a barrel for this summer, as well as a $5 increase over Brent’s forecast of $75 a barrel next year. the bank said.
By Tsvetana Paraskova for Oilprice.com
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