The Wall Street investment bank sees global oil demand growth of 2.7 million barrels per day in 2023, pushing the market into deficit in the second half and lifting Brent prices to $105 per barrel by the fourth quarter.
“This tightening, in turn, should allow OPEC to start unwinding its October production cut in H2,” analysts at Goldman said in a note dated Jan. 9.
Brent futures were trading around $80 a barrel on Tuesday, while U.S. crude was above $75 per barrel.
“However, if the market turned out to be softer, then OPEC could stick to its October cuts or cut production even further given its significant pricing power,” Goldman Sachs said.
OPEC’s pricing power has grown “unusually high” in recent years with the formation of OPEC+, which boosted the market share of the 13-nation bloc with its oil-producing allies, it said.
Moreover, supply alternatives to OPEC, like U.S. shale, grapple with low price elasticity and limited spare capacity, while demand remains little changed in a global energy market scrambling to substitute oil, the note said.