Oil: Brent price could see a $13 rise on OPEC+ 1M bbl/day output cut – Goldman Sachs

Analysts at Goldman Sachs explain why OPEC and its allies (OPEC+) are expected to announce output cuts on Wednesday while predicting the Brent crude price on a potential one million bbl/day output cut.

Key quotes

"The collapse in investor participation, driving liquidity and prices lower, is also a likely strong catalyst for such a cut, as it would increase the carry in oil and start to claw back investors who have instead turned to USD cash allocation following the aggressive Fed hikes."

"OPEC is probably more powerful than it's ever been in its 60-year history since its inception. And one of the reasons really is the fact that we have not been investing in alternative energy sources. So they're really the only game in town."

“In the case of the 1 mn bbl/day output cut:

Forecasts a circa US$13 / bbl rise in the price of Brent crude.

Over the course of 12 months, but mainly front-loaded.

Also suggest there is a possibility of a great rise in price, circa $20 /bbl when inventories fall again.”