“The agreement included two notable focus points: a moderate increase in production that will keep the market in deficit in the coming months, as well as guidance for increased capacity that will be required in the coming years in light of the growing investment shortage,” Goldman Sachs said in a note.
Goldman said the agreement is in line with his view that “OPEC should focus on maintaining a tight market all the time with its direction to increase future capabilities and discourage competitive investments.”
Goldman said that the OPEC + agreement represents an “upside” of two dollars per barrel, compared to 80 dollars per barrel in its expectations for the price of Brent crude in the summer, and an increase of five dollars to its expectations of 75 dollars per barrel for next year.
However, Goldman expects oil prices to fluctuate in the coming weeks due to risks from the delta strain and the slow pace of supply developments compared to the recent increase in mobility activity.
With most of the demand increase he predicted for the summer already in place, and with headwinds from the mutated delta strain of COVID-19 surging, Goldman said the impetus for the next round of price hikes is shifting from the demand side to the supply side, with the prospect of a lift in price forecasts in the coming months. .
Oil prices fell by more than $1 a barrel on Monday after the OPEC+ group of producers overcame internal divisions and agreed to increase production, raising concerns about oversupply amid a surge in COVID-19 cases.