Following a pandemic outbreak in Vienna, the OPEC+ union concluded on reducing oil production. The United States instantly criticized the organization’s decision considering possible aftereffects. Goldman Sachs Group, however, edged its cost prediction of standard Brent oil prices for quarter four.
Analysts Expressed Their Take On Oil Slash
On Wednesday, Vienna experienced a recurrence of Covid-19. As a result, OPEC board members agreed to cut daily oil output. The members decided to bring it down by two million barrels.
The US did not appreciate the union’s choice. Moreover, Several analysts raised concerns regarding the possible aftermaths of lowering oil production. Morgan Stanley, Goldman Sachs, USB Group, and others expressed their opinions.
According to Morgan Stanley analysts, Brent will rise to $100 per barrel sooner than expected. Martijn Rats supported Morgan analysts’ notion in a publication. They further said downsizing output would provoke a significant contraction in oil markets.
But, the outcome of the EU’s sanction on Russia’s oil products will determine what’s next. The bank raised its prediction of oil for the first quarter of 2023. It noted a potential surge to $100 from $5.
Although, it maintained its outlook for the subsequent nine months.
Damien Courvalin, leader of energy research at Goldman Inc., spoke to Bloomberg TV concerning oil. He said the current ongoing clears a path for a potential price rise before December. The bank upped its estimate of Brent for quarter four from $10 to $110.
Other Analysts’ Oil Price Prediction
USB Group AG analysts forwarded their opinions of ranges Brent price may hit before December. They stated oil markets would become tighter due to the turn of events. Due to this, the price will climb up to $100 in the next quarter.
Additionally, with an active ban on importing Russian products market would contract even more. Also, a shift in demand for oil products would contribute awfully to the situation.
Warren Patterson of ING Groep stated in an interview the implications of OPEC’s move. The commodity strategist said there would be massive deficits in the books throughout 2023.
Furthermore, he stated that Brent’s price would rally to $97 in 2023. The US strategic firm also revealed more feasible effects of price lift.
Ed Morse and Francesco Martoccia said that the union is already backward on its quotas. So, despite broadcasting a massive quantity cut, it would eventually stick to a small ratio. Besides, OPEC may regret its decision if oil demand increases alongside economic activities.
RBC Capital Market analysts opined that the reduction would probably fall around one million barrels. Saudi Arabia currently accounts for over fifty percent of that. However, the White House would release fresh updates about it later.
Stephen Innes stated the oil sector is busy evaluating possible complications of the cut. That includes disarrays between outputs and cuts. However, Brent crude should touch $100 over the next few months.