Goldman Sachs raises its Brent summer peak estimate to $87/barrel

Oil drilling rigs

Goldman Sachs raised its summer 2024 Brent peak estimate as disruptions in the Red Sea contribute to modestly larger-than-expected draws in OECD commercial stocks.

In a note issued on Feb. 25, the bank lifted its summer 2024 peak Brent forecast by $2 to $87 per barrel.

“OECD commercial stocks on land have drawn somewhat faster than expected as the redirection of flows away from the Red Sea has increased inventories on water,” it explained.

Despite the Red Sea escalation, Goldman expects Brent to remain in the $70-90 range, noting that the muted price volatility amid the ongoing Middle East and Ukraine wars reflected a marginal geopolitical risk premium.

According to the bank, the elevated surplus capacity would allow OPEC+ to offset disruptions in most scenarios. Meanwhile, the robust non-OPEC supply growth is seen to nearly keep pace with solid global demand growth.

Goldman continues to expect oil demand growth at 1.5 million barrels per day (bpd) in 2024, with a downgrade in Chinese demand balanced by upgrades in India and the US.

It also forecasts OPEC+ policymakers to decide on an extension of output cuts in early March in order to keep the market in a moderate deficit, which it sees at 500,000 bpd and 400,000 bpd in the first and second quarters of this year, respectively.