OPEC seen to maintain $80 floor for oil next year: Goldman Sachs

Logo of OPEC

OPEC is expected to maintain a $80 floor for oil in 2024 despite the recent decline in oil prices, said Goldman Sachs.

“We believe that OPEC will ensure Brent in a $80-$100 range by leveraging its pricing power and production capacity,” said a team of Goldman commodities analysts.

Brent and WTI crude have each fallen more than 8% this year, which Goldman blames on “much stronger than expected” non-core OPEC supply.

They cite two factors, a “one-time boost” to US production growth caused by a post-pandemic ease in supply constraints for rigs, parts and workers; and supply from specific sanctioned in economies exceeding expectations in 2023.

But factor should fade, says the bank, with non-core supply growth slowing to 1.5 million barrels per day in 2024 from 2.5 mb/d this year.

Goldman sees Brent unlikely to “sustainably drop” below $80 a barrel for several reasons, the first being so-called OPEC puts. A put option gives the holder the right, but not an obligation to sell a specific number of securities at a specified price within a specified time.