Recent geopolitical shifts might pave the way for oil prices to touch the $100 mark, experts suggest. Saudi Arabia recently extended its self-imposed production cuts for another quarter, while Russia announced a decrease in its exports by 300,000 barrels daily until the close of this year. These adjustments come atop the OPEC+ cuts from last year’s end.
Even as the crude futures have witnessed a rally of over 25% since the end of June, constraints are evident due to factors like China’s slower economic bounce-back and the US amplifying its production output.
Analysts commented, “The latter part of this year will likely see a tightened supply, especially as Riyadh and Moscow seem keen on sustaining output reductions.” Their predictions place the average WTI price at $86.50 per barrel and Brent International at $91 per barrel for the concluding quarter.
Michael Tran and Helmina Croft, experts at RBC Capital Markets, in their recent investor note, expressed, “Just months ago, $100/bbl seemed out of the question. But now, it’s almost within reach. Although we’re hesitant to call it our primary scenario, the oil market’s propensity to be swayed by momentum, as much as by fundamentals, makes it an intriguing consideration.”
West Texas Intermediate observed a halt in its upward stride, settling at $86.87 this Thursday. Meanwhile, Brent crude futures settled slightly lower at $89.92 per barrel.
Goldman Sachs has an even more ambitious prediction. They anticipate Brent crude might climb as high as $107 per barrel by December 2024, conditional on OPEC+ extending some of their output cuts into the upcoming year.
In a note, Daan Struyven and his team stated, “If OPEC+ maintains the 2023 cuts they declared in April of this year and if Saudi Arabia opts for a cautious production increment of 250kb/d monthly at the onset of 2024, we could see a potential $14/bbl increase over our December 2024 estimate of $93/bbl.”
The recent OPEC meeting in Vienna, Austria, witnessed the participation of Saudi Arabia’s Minister of Energy, Prince Abdulaziz bin Salman Al-Saud, shedding more light on the evolving oil landscape.
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