Goldman Sachs stated that a slight short-term increase in Brent prices is supported by the decrease in crude production from Russia, Kazakhstan, and Iraq following OPEC+ production cuts.
In a note, the investment bank stated that it now believes that oil production cuts will expire in April 2025 rather than January and that Saudi Arabia is more likely to prolong them due to the recent price decline.
Goldman Sachs kept the average price of Brent at USD 76 per barrel for 2025. A planned increase in oil output that was supposed to begin in January is being discussed by OPEC+, which consists of OPEC members and allies like Russia, according to two group sources.
OPEC+ decided at its most recent meeting on November 3 to postpone a planned output increase for December by one month.
“Any ramp-up in OPEC+ production will be gradual and data-driven,” the bank said, as reported by Zawya.
Goldman went on to say that increased adherence to OPEC+ production cuts indicates that the nations in the group are cooperating to keep oil prices stable. According to Goldman, production from Russia, Kazakhstan, and Iraq fell by 0.5 million barrels per day in November 2024.
Executives from the multinational commodities trading conglomerate Vitol, Trafigura, and Gunvor stated at the Energy Intelligence Forum in London that it is unlikely that OPEC members will reverse voluntary production cuts anytime soon.
However, Brent futures have largely remained in the $70-$80 range this year and were trading below USD 74 on Tuesday, despite OPEC+’s production cuts and delays to output hikes. Despite a 2024 deficit and geopolitical uncertainty, Goldman Sachs updated Brent prices last week to average about USD 80 per barrel in 2024, pointing to an expected 2025 surplus.
Meanwhile, Oil prices have risen in early European trade following a 2.7% drop. Hopes of a ceasefire in the Middle East helped push oil prices lower as market focus shifted back toward supply-demand dynamics.
Talking about the OPEC+ output policy meeting, the much-anticipated event has been postponed to December 5 from December 1 to avoid a conflict with another event. A summit of Gulf countries is due to be held in Kuwait City which several OPEC+ ministers plan to attend.
OPEC+, which comprises OPEC and allies led by Russia pumps about half the world’s oil. The group aims to gradually unwind oil production cuts through 2025 which it introduced to help support prices. However, a slowdown in Chinese and global demand and rising output outside the group pose hurdles to that plan. OPEC+ members are reportedly holding back 5.86 million barrels per day (bpd) of output, or about 5.7% of global demand.