Goldman Sachs has reaffirmed its forecast for Brent crude oil prices, predicting an average of $64 per barrel for the fourth quarter of 2023. This forecast comes in light of recent market fluctuations that have driven both Brent and West Texas Intermediate (WTI) prices higher. Analysts from Goldman Sachs noted that increased pressure on oil supplies from Russia and Iran due to sanctions presents an upside risk to their price predictions, particularly as spare capacity is normalizing more rapidly than anticipated.
In a recent statement, Goldman Sachs analysts highlighted the implications of geopolitical tensions, noting that U.S. President Donald Trump threatened to impose 100% additional tariffs on Russian oil imports unless Russia agrees to a ceasefire in Ukraine. Despite this, major buyers of Russian oil, notably China and India, have signaled their intent to continue purchases, which could lower the bearish sentiment surrounding oil prices.
The investment bank projected that U.S. tariffs could reduce oil demand by approximately 800,000 barrels per day between now and next year. The analysts pointed to weaker-than-expected economic data from the United States as a contributing factor to this demand estimate. “The U.S. economy is now growing at a below-potential pace,” they stated, suggesting an increased risk of recession within the next 12 months compared to their previous outlook.
OPEC+ Production Policy and Market Dynamics
Regarding the production policies of OPEC+, Goldman Sachs analysts assumed that the group would maintain its production quotas unchanged after September. They expect that the pace of builds in OECD commercial stocks will accelerate, coupled with diminishing seasonal demand. OPEC+ had recently agreed to increase oil production by an additional 547,000 barrels per day next month, following a similar increase in August. This decision is part of a broader strategy to restore approximately 2.5 million barrels per day of supply, equating to around 2.4% of global demand, by September.
As global markets adjust to these developments, the interplay of geopolitical factors, economic performance, and production policies will significantly influence the oil industry’s trajectory in the coming months.
