Crude oil price hits $97 per barrel, the highest so far in 2023

According to data sourced from Oilprice, Brent Crude oil experienced a substantial surge, reaching $97.2 per barrel in the early hours of Thursday, September 28. This price point marked its highest level since November 2022. This notable price escalation was primarily attributed to a surge in demand coupled with a significant reduction in crude oil supplies.

Saudi Arabia and Russia played pivotal roles in driving this increase as they announced oil production cuts slated to continue through the end of 2023, with monthly assessments to gauge the evolving situation. In early September, the benchmark surpassed the $90 per barrel milestone for the first time in ten months, primarily due to the voluntary reductions in production by Riyadh and Moscow.

As the Organization of Petroleum Exporting Countries (OPEC) convenes on October 4, market analysts anticipate a comprehensive examination of market dynamics, with potential revisions to supply levels and pricing strategies by oil producers.

Just last week, Goldman Sachs adjusted its 12-month forward forecast for Brent Crude oil prices from $93 per barrel to $100 per barrel, citing stronger inventory draws driven by the extended OPEC+ production cuts and global demand growth.

In a note seen by Reuters, Goldman Sachs analysts explained their updated forecast, stating, “We have nudged up our 12-month Brent forecast from $93 a barrel to $100 a barrel as we now expect modestly sharper inventory draws.”

Several critical factors underpin this bullish outlook for Brent crude prices. First and foremost, the reduced supply from OPEC, led by Saudi Arabia and supported by other key producers, combined with robust demand, is expected to more than offset any potential increase in U.S. oil production.

According to assessments by the Wall Street Bank, the OPEC+ group’s production cuts and surging demand are likely to keep Brent prices within a range of $80 to $105 per barrel throughout 2024. While Goldman Sachs does not anticipate Brent oil trading above $105 per barrel for an extended period next year, they also do not foresee prices dipping below $80 per barrel for an extended duration.