The bank warned its clients that prices could fall further to the level of $ 20 a barrel.
Goldman Sachs said in a note issued on Sunday: “The significant reduction in the official selling price of Saudi crude and Russia’s reluctance to conclude a deal on Friday indicates the weak possibility of reaching an (OPEC +) agreement immediately.”
“While we cannot exclude an OPEC + agreement in the coming months, we also believe that the agreement is fundamentally unbalanced while the cuts lack economic justifications,” the bank added.
The bank said that the main concept for it now is not to reach a similar agreement, according to Arab markets.
The bank added that the low prices will start to create severe financial pressure and a decline in the production of shale oil and other producers who bear high costs.
Assuming production policy remains unchanged, Goldman predicts a supply deficit in the fourth quarter of 2020, which could reduce the stockpile surplus until 2021.
The bank said that the possibility of withdrawing from stocks may help prices recover to $ 40 a barrel by the end of this year.
He explained that this step completely changed the outlook for oil and gas markets, as he reduced his estimates for the second and third semesters of this year to $ 30. They added: “We believe that a price war has definitely started last weekend.”
And early in the trading, oil prices fell by about 31%, and if losses continue like this until the trading settlement, then the crude would witness the worst daily performance since the Gulf War in 1991.
The US bank said that speculation about the oil market is more difficult compared to the situation in November 2014, when the last price war began.
The Organization of Petroleum Exporting Countries, which proposed an additional reduction in crude production by 1.5 million barrels per day during the second quarter, had failed to reach an agreement with allied crude producers from outside OPEC, including Russia.
Oil prices tumbled after the failure to reach an agreement to increase production cuts to support prices. Brent crude futures fell 31% to $ 31.02 a barrel, and US crude fell 27% to $ 30 a barrel in the first minutes of the morning, amid dealers in Asian markets reacting to Saudi Arabia’s decision to reduce sales prices and increase its oil production .