Breaking News: Wall Street Predicts Massive Surge in Oil Prices After OPEC Cuts

The recent announcement by OPEC+ to cut oil production has sent shockwaves through the global financial markets, with analysts on Wall Street raising their forecasts on oil prices. The move has been seen by some as a form of geopolitical posturing, with Western sanctions on Moscow amidst the ongoing Ukraine war leading to Russian energy exports being diverted towards countries like China and India.

Goldman Sachs Commodities Research analysts have revised their forecasts on Brent crude oil to $95/bbl for December 2023, and to $100 for December 2024. This represents an increase of $5/bbl from their previous estimates. Similarly, analysts at Capital Economics have revised their price target upwards, with an end-2023 Brent forecast of $90 per barrel.

While the OPEC+ cuts are surprising, they reflect important economic and political considerations. From an economic perspective, the cuts are likely to increase Saudi and OPEC+ oil revenues. On the political side, the move may be related to recent comments from the United States Energy Secretary indicating that it would be difficult to refill the U.S. strategic petroleum reserve this year.

Aside from the impact on the physical oil market, there is a strong element of geopolitical posturing embedded in these voluntary cuts. The move demonstrates the group’s support for Russia and flies in the face of the Biden administration’s efforts to lower oil prices.

It is worth noting that the recent surge in oil prices does not rule out bouts of price weakness as advanced economies enter a recession between now and the end of 2023. Nonetheless, investors should keep a close eye on developments in the oil market and adjust their portfolios accordingly. The OPEC+ cuts have the potential to create both risks and opportunities for investors, and it is essential to stay informed and make well-informed decisions.