Oil prices could surpass $100

According to Goldman Sachs, if both Russia and Saudi Arabia continue to tighten supply, oil prices could rise to $107 - equivalent to the early days of the Ukraine war.

On September 5, Russia and Saudi Arabia – the two leading countries of the Organization of the Petroleum Exporting Countries and its allies (OPEC+) announced the extension of measures to tighten oil supply until the end of this year. Accordingly, Saudi Arabia continues to reduce production, while Russia limits exports. This announcement has pushed Brent oil to over 91 USD per barrel – the highest in 10 months.

Goldman Sachs had previously forecast Brent crude oil prices at $86 a barrel in December and $93 a barrel by the end of next year. Now, following the announcements from Russia and Saudi Arabia, the bank said its forecasts "face two upside risks."

One is that if Saudi Arabia cuts supply by another 500,000 barrels a day, Brent could rise $2. The second risk is the possibility that OPEC+ members will continue to extend the cuts.

Previously, they forecast that OPEC+ would gradually restore production in January 2024. But now, the bank leaves open the possibility that OPEC+ will maintain the current level of cuts. "In the case that OPEC+ maintains 2023 production until the end of 2024 and Saudi Arabia is slow to restore production," Brent oil prices will rise to $107 by December 2024.

Higher oil prices could help Saudi Arabia balance its budget and Russia generate more revenue. But triple-digit prices could prompt U.S. shale producers to increase supply, driving down prices. Higher prices could also accelerate investment in clean energy.

The US also does not want oil prices to reach $100 a barrel, because of the " political importance of gasoline prices". No US president wants to see gasoline prices skyrocket, especially before an election.

Asked about Russia and Saudi Arabia's supply-side moves, US National Security Adviser Jake Sullivan said US President Joe Biden is focused on "doing everything in our power to lower gas prices for consumers." "Our ultimate goal is a stable, efficient global energy supply," he affirmed.

Ha Thu (according to CNN)

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