Wednesday, July 24, 2024

Saudi Arabia Will Push Oil Prices Towards 3 Digits… But It Won’t Help Them, Via


© Reuters – Goldman Sachs (NYSE: ) has warned its clients that unless Saudi Arabia and Russia ease aggressive supply cuts, record highs could rise to triple digits within the next year.

The Wall Street bank had pegged oil prices higher before Russia and Saudi Arabia announced earlier this week that they would extend output cuts until the end of 2023. For the first time in 10 months. Brent crude oil is the global oil price benchmark and is produced in the North Sea.

read more:

Two upside risks

Goldman Sachs predicts $86 in December and $93 by the end of 2024. But now there are two “downside risks” to its outlook, CNN reported.

First, Goldman Sachs expects Saudi oil supplies to be 500,000 barrels per day lower than previously expected. This alone is expected to add two dollars to the price of a barrel of oil.

Second, Goldman Sachs warned that if OPEC+ cuts continue to be extended, some assumptions about oil production could be wrong.

The bank expected countries to roll back half of the 1.7 million barrels per day cut announced in April in January. Now the bank is offering to extend it for a longer period.

Analysts at the bank explained in a note, as reported by CNN: OPEC+ maintains production cuts and fully implements them until the end of 2024, and Saudi Arabia increases production only gradually. In this scenario, Brent oil prices will rise to $107 a barrel by December 2024, the bank said.

read more:

Raising oil prices too much will not benefit OPEC+

Goldman Sachs emphasized that this was not the bank’s “primary vision” because such a strategy could backfire.

See also  41.9 thousand new accounts for Dubai Financial investors

While higher oil prices will help Saudi Arabia balance its budget and Russia fund its war machine, Goldman Sachs says triple-digit oil prices will prompt US shale producers to increase their supply at lower prices. Additionally, higher prices may lead to increased investment in clean energy.

Another reason OPEC+ doesn’t want $100 oil is the “political significance of US gasoline prices,” according to Goldman Sachs.

US presidents don’t want to see gasoline prices rise, especially before an election.

In response to a question about the Russian and Saudi supply cuts on Wednesday, US national security adviser Jack Sullivan told reporters that President Joe Biden is “focused on trying to do everything in his toolbox to get lower prices for consumers.”

Meanwhile, US Secretary of State Anthony Blinken commented on the announcement by Saudi Arabia and Russia that they have decided to extend oil production cuts for another 3 months until the end of 2023.

Blinken told a press conference from Kiev about the Russian-Saudi decision, “We will watch this matter carefully in the coming days and weeks to see what it actually achieves and what it reflects on the markets. The cut may cause an immediate rise in prices, but this may stabilize soon.”

Investing Saudi Arabia is hosting a free webinar on gold fundamentals with brilliant analyst, Qaida Abu Hilal, on Thursday at 6pm Riyadh time and 7pm Dubai time.

All you have to do is register, seats are limited: click here to register

Golden Basics Webinar - Kait Abu Hilal

Nadia Barnett
Nadia Barnett
"Award-winning beer geek. Extreme coffeeaholic. Introvert. Avid travel specialist. Hipster-friendly communicator."

Share post:


More like this

Embrace the Adventure: Discover Dubai’s Dune Buggy Tours

Introduction to the Dubai Dune Buggy Tour Buckle Up, Adventure...

Why Estonia is the Perfect Launchpad for Luxury Brands

The world of luxury fashion is synonymous with elegance,...

The Real Benefits of Being a VIP in the Online Casino Scene

Becoming a VIP can be a long process that...

The Evolution of Online Casino Bonuses: Trends and Future Predictions

Online casino bonuses have transformed from basic sign-up offers...