Oil Surges In Early Trading After OPEC+ Surprise ‘Unipolar World’-Challenging Production Cut

2023 04 02 10 37 31

by TYLER DURDEN at zerohedge.com

As one would have expected, oil prices are surging at the futures open with WTI up over 7% near $82 – its highest since late Jan

Additionally, less than two weeks after slashing its 2024 Brent price target from $100 to $94, Goldman done a full 180, and late on Friday raised its 2024 Brent forecast back to $100, and 2023 oil price target to $95 (from $90, and from $95 previously).

Nine members of OPEC+ announced today a surprise “voluntary” collective output cut totaling 1,66mn b/d which will take effect from May till the end of 2023.

As we have argued, OPEC+ has very significant pricing power relative to the past, and today’s surprise cut is consistent with their new doctrine to act preemptively because they can without significant losses in market share.

As we already assumed that Russia cuts would extend into 2023H2, we are lowering our OPEC+ production end-2023 forecast by 1.1 mb/d. Incorporating this significantly lower OPEC+ supply, slightly lower demand, and the modest French SPR release, we have nudged up our Brent forecasts by $5/bbl to $95/bbl (vs. 90 previously) for December 2023, and to $100 (vs. 97) for December 2024.

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