Goldman Sachs has noted that the ongoing OPEC+ oil production cuts and the improved compliance with quotas from some producers are supporting Brent Crude, offering a modest upside to oil prices in the near term.
The U.S. investment bank expects the OPEC+ cuts to be rolled over again and the easing of the output curbs could begin gradually in April 2025, after the first quarter of next year ends.
“Saudi Arabia is more likely to extend oil production cuts because of the recent price drop and we now think that oil production cuts will last until April 2025 instead of January,” Goldman Sachs analysts said.
“Any ramp-up in OPEC+ production will be gradual and data-driven,” the investment bank said.
Iraq, Kazakhstan, and Russia – which have pledged numerous times to start complying with their quotas – collectively saw their combined production drop by 500,000 barrels per day (bpd) this month, according to Goldman Sachs.
Last week, Goldman Sachs said that Brent Crude oil prices are set to average $76 per barrel next year, down from an expected average of $80 a barrel in 2024, amid an expected surplus on the market.
The bank expects 400,000 bpd of surplus on the market in 2025. This surplus is expected to grow to 900,000 bpd in 2026. Therefore, the Wall Street bank sees Brent Crude prices averaging $71 per barrel in 2026.
Earlier this week, top officials from the three biggest producers in the OPEC+ alliance – Saudi Arabia, Russia, and Iraq met to discuss the state of the global oil market, days before the group is set to meet on December 1 to decide how to proceed with the production cuts.
Weak fundamentals could prompt the OPEC+ group at the December 1 meeting to delay once again – the output increase currently planned to begin in January, according to recent market speculation.
The most recent signal of a possible delay came from non-OPEC producer, Azerbaijan.
The OPEC will likely remain committed to production curbs for yet another month, the energy minister of Azerbaijan told Reuters this week.