Brent crude oil is expected to reach $100 per barrel in the next 12 months, up from an earlier forecast of $93 per barrel, Goldman Sachs said in a report on Friday.
According to the Goldman Sachs Research, the rise is due to reduced supply from OPEC and to rising demand which is expected to more than offset an increase in oil supply coming from the US.
The report explained that 'the lower for longer' supply from Saudi Arabia and its OPEC+ partners is the main reason for the forecast change.
'Saudi Arabia's recent production announcement signals its strong determination to drive down inventories and push up prices,' the report underlined.
At the same time, there's scope for Saudi Arabia to boost profits in 2024 depending on which supply cuts are expended, as the increase in oil prices can compensate for the decline in Saudi production.
- China's economy shows signs of 'bottoming out'
According to the report, OPEC is likely to reduce its oil production for longer because of more supply coming from outside the organization — most notably from the US. Supply constraints for parts, rigs, and workers have eased in the US, and producers are drilling and completing wells more quickly with more powerful rigs with less downtime.
'There will likely be more global demand for oil in 2024 led by Asia, as the slowdown in China's economy shows signs of 'bottoming out,' the report said and added that India and the Middle East are also expected to have large increases in demand.
Commenting on the predictions for the next year, Goldman Sachs Head of Oil Research Daan Struyven explained in the report that OPEC will probably be able to keep Brent prices in a range of $80-$105 next year.
By Gulsen Cagatay
Anadolu Agency
energy@aa.com.tr