The oil market could be in deficit in the second half of 2023 amid a sharp recovery in demand in China and stagnant supply. For this reason, the OPEC+ alliance at a meeting in June may decide to increase production, Report informs referring to Goldman Sachs.
In October, the OPEC+ countries agreed to cut their combined oil production by 2 million barrels per day until the end of 2023.
Goldman Sachs expects oil prices to gradually rise to $100 per barrel by December, subject to an increase in OPEC+ production in the second half of the year by 1 million barrels per day.
If OPEC+ does not change the level of production, then Brent prices may reach $107 per barrel by December and continue to grow further.
Saudi Energy Minister Prince Abdulaziz bin Salman said in February that the current OPEC+ deal to cut production would remain in place until the end of the year. However, he is wary of China’s demand forecasts.
Meanwhile, Goldman Sachs lowered its second-quarter Brent crude price forecast to $90/bbl from its previous estimate of $105/bbl.
Historically, OPEC has raised output while increasing consumption in the US, but the cartel has been cautious in its response to changes in demand in China, the bank said in a report.