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Goldman Claims Oil Prices Could Hit $107 If OPEC+ Extends Cuts Next Year

Oil prices could hit $107 per barrel next year if OPEC+ producers do not reverse their production cuts in 2024, Goldman Sachs said, noting that a triple-digit price is not the bank's base-case scenario.

On Tuesday, Saudi Arabia extended its 1 million barrels per day (bpd) cut through December 2023 in a move it says reinforces "the precautionary efforts made by OPEC Plus countries with the aim of supporting the stability and balance of oil markets." The cuts, which mean the Saudis will pump 9 million bpd until the end of the year, will be reviewed monthly to consider deepening the cut or increasing production, depending on the state of the market.

Russia also extended its 300,000 bpd export cut into December, with the option to review every month and potentially deepen the cuts or increase supply, according to market conditions.

The moves by Saudi Arabia sent oil prices soaring, with Brent breaking $90 and WTI nearing the $88 mark.

Following the announcements, Goldman Sachs Commodities Research wrote in a note that the extended cuts increase the upside risks for oil prices.

"Consider a bullish scenario where OPEC+ keeps the 2023 cuts…fully in place through end-2024 and where Saudi Arabia only gradually raises production," Goldman's analysts wrote, as carried by CNN.

This bullish scenario may push oil prices up to $107 per barrel in December 2024, the Wall Street bank said, but cautioned that this is not its base-case scenario.

"This is not our baseline view because we think the producer group is unlikely to pursue prices well above $100/bbl given the strong supply and investment response to the 2022 energy crisis, our high-frequency tracking of U.S. shale, and the political importance of U.S. gasoline prices," per Goldman's note carried by Reuters

Other analysts say that the extended supply cuts from the two OPEC+ leaders, Saudi Arabia and Russia, do not warrant a $100 a barrel oil price, especially in light of persistent economic and oil demand concerns.

By Tsvetana Paraskova for

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Tsvetana Paraskova

Tsvetana is a writer for with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.  More