Goldman Sachs "High Possibility of OPEC Production Cuts... Oil Price Expected to Reach $110 Next Year"

[Asia Economy New York=Special Correspondent Joselgina] Goldman Sachs predicted that Brent crude oil prices could reach $110 per barrel next year as oil-producing countries, including Saudi Arabia, take additional measures to curb the decline in oil prices.

According to the economic media CNBC on the 29th (local time), Goldman Sachs judged that it is highly likely that the Organization of the Petroleum Exporting Countries (OPEC) member countries and the non-OPEC oil-producing countries coalition 'OPEC+' will decide on additional production cuts at the oil-producing countries' meeting on December 4.

Jeff Currie, Global Head of Commodities at Goldman Sachs, said, "In recent months, we have downgraded oil price forecasts due to factors such as a strong dollar and China's COVID-19," but added that due to this additional production cut variable, the 2023 oil outlook is "very positive." He then presented the Brent crude oil forecast for next year at $110 per barrel.

However, he also acknowledged that there are many uncertainties ahead. In the market, factors raising uncertainty include concerns about an immediate economic recession, a decrease in China's oil demand due to strengthened COVID-19 lockdowns, and political relations among oil-producing countries including Russia.

International oil prices have continued to decline in recent months. Brent crude, which was trading above $100 per barrel at the end of August, is trading around $83 per barrel at the London ICE Futures Exchange this afternoon. West Texas Intermediate (WTI) crude oil is also moving around $78 per barrel at the New York Mercantile Exchange.

OPEC+, led by Saudi Arabia and Russia, had previously agreed to cut production by 2 million barrels per day starting in November. This decision attracted more attention as it was made under explicit pressure from the United States to lower oil prices. Additionally, OPEC+ hinted that more drastic production cuts could occur as the decline in oil prices continues.

Meanwhile, Francesco Starace, CEO of the Italian power company Enel, predicted at the Goldman Sachs Conference that "the energy market will face extreme volatility over the next 1 to 2 years." This is interpreted as a concern arising from the prolonged Russian invasion of Ukraine, which has increased uncertainty in the energy market.

According to the International Energy Agency, Russia has reduced gas supplies to the European Union by nearly 50% compared to the previous year since early 2022. Furthermore, ahead of the so-called heating season, there is also talk of Russia potentially completely halting pipeline gas supplies to the EU. He mentioned, "Thanks to our storage facilities, we can get through the winter, but afterward, we will realize that we have to refill storage without Russian gas for the next winter." He also added that in 2023, there will be a big fight to increase energy self-sufficiency.