Saudi Arabia is expected to hike its crude oil production to 10 million barrels per day (bpd) by the end of 2021, up by 1.5 million bpd from May, due to rising global oil demand, Goldman Sachs said on Tuesday.
Farouk Soussa, Middle East and North Africa (MENA) economist at Goldman, raised his forecasts for Saudi Arabia’s oil production by 500,000 bpd from previous estimates, according to a note carried by Bloomberg.
“We see risks to the oil sector as being significantly skewed to the upside,” Soussa wrote in the note.
Goldman Sachs continues to believe that Brent Crude will hit $80 per barrel this summer as global demand quickly recovers.
In May, Saudi Arabia pumped just below 8.5 million bpd, having boosted its production by 345,000 bpd from April, as per the OPEC+ deal to gradually ease the cuts, OPEC’s secondary sources showed in the cartel’s monthly report last week.
Production in Saudi Arabia is set to rise to 9.5 million bpd by the end of July. Oil output is set to reach 10 million bpd by the end of this year, and 10.5 million bpd next year, according to Goldman Sachs. Related: Could Energy Ties Bring Saudi Arabia's Conflict With Iran To An End?
The global demand rebound and the strong domestic recovery in oil demand also prompted Goldman to raise its economic growth projections of Saudi Arabia. The U.S. investment bank now sees the Saudi economy rising by 4.5 percent in 2021, compared to an earlier forecast of 2.5 percent growth.
To compare, the International Monetary Fund (IMF) expects the Saudi economy to grow by 2.9 percent in 2021.
The IMF also said in its latest MENA regional forecast in April that higher oil prices and a rebound in the global economy and oil demand are set to lower the fiscal breakeven oil price of the major Middle Eastern oil producers, with the breakeven oil price for Saudi Arabia dropping to $65.70 in 2022 from $77.90 in 2020.
Meanwhile, Saudi Arabia’s non-oil sector grew by 2.9 percent in the first quarter of 2021, official data from the Kingdom showed on Monday. Overall GDP, however, declined by 3.0 percent year over year due to an 11.7 percent contraction in the oil sector in Q1 2021.
By Tsvetana Paraskova for Oilprice.com
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