RIYADH: Brent crude could reach $100 per barrel, much quicker than the previous estimation, as the Organization of the Petroleum Exporting Countries, and its allies, known as OPEC+, agree to cut oil output by 2 million barrels from November, according to Morgan Stanley analysts.
According to a Bloomberg report, analysts including Martijn Rats noted that the reduction of output will tighten the market, and added that the prices will be also dependent on the EU’s decision on Russian energy exports.
Morgan Stanley also increased its Brent price forecast by $5 to $100 a barrel for the first three months of 2023.
Echoing similar views, Damien Courvalin, head of energy research at Goldman Sachs told Bloomberg TV that energy prices will surely increase by the end of this year.
“All the developments we have seen on the supply side at this point very much sets the stage for what we believe will be higher prices into the end of this year,” said Courvalin.
Goldman Sachs also increased its fourth-quarter estimate for Brent crude by $10 to $110 per barrel.
UBS Group AG said that the current output cuts, along with the European ban on Russian crude imports will squeeze the market in the coming months.
On the other hand, Citigroup Inc. noted that this output ban will be mostly on paper, as the effective cut will be much smaller as OPEC+ is already failing to fulfill their quotas.
Citigroup also warned that the move to reduce output could backfire on OPEC+ if it hits economic activity and oil demand further.
