Goldman Sachs Raises Brent Oil Summer Price Forecast to $87 per Barrel

Oil prices are expected to rise this summer, according to Goldman Sachs, which has revised its forecast for Brent crude oil to $87 per barrel. This is $2 higher than their previous prediction and is due to faster-than-anticipated declines in oil inventories on land.

These declines are a result of disruptions to seaborne trade caused by the ongoing crisis in the Red Sea. This has led to a build-up of oil on ships, while land-based inventories have fallen.

Despite the price increase, Goldman Sachs expects Brent crude to remain within a range of $70-$90 per barrel in the near future. This is due to several factors, including:

• Increased spare capacity by OPEC+: This allows the oil producer group to respond to any major supply disruptions.
• Solid growth in global oil consumption: This is expected to be met by increased non-OPEC+ supply.
• OPEC+ production cuts: Goldman Sachs expects the alliance to extend these cuts into the second quarter of 2024, gradually unwinding them later in the year.

While Goldman Sachs predicts an average price of $80 per barrel for Brent in 2025, they believe a sustained drop below $70 is unlikely. This aligns with projections from other analysts, such as Deutsche Bank, which expects Brent to reach $88 per barrel by the end of the year.