Goldman Sachs expects oil prices to remain around $80/bbl in 2024

Goldman Sachs expects Brent prices to average around $80 per barrel this year, despite a 2024 deficit and geopolitical uncertainty, citing an anticipated 0.4 mb/d surplus next year, the bank said in a note on Thursday. 

"Our base case is that Brent stays in a $70-85 range, with high spare capacity limiting price upside, and the price elasticity of OPEC and shale supply limiting price downside. 

However, the risks of breaking out are growing," Goldman Sachs said. 

Oil prices rose on Friday, with Brent futures reaching $74.37 after Russia announced it had fired a ballistic missile at Ukraine and warned of a potential widening conflict, raising concerns over tightening crude supplies. 

The bank sees upside risks to Brent prices in the short term, with prices potentially rising to the mid-$80s in the first half of 2025 if Iranian supply drops by one million barrels per day (mb/d) on tighter sanctions enforcement. 

The medium-term price risks skew to the downside given the high spare capacity, Goldman said. 

"While there is ample spare capacity in oil production, we expect refining to remain quite tight and gasoline and diesel margins to recover further." 

The investment bank still sees Brent averaging $76 per barrel in 2025, but edged down its 2026 forecast to $71 per barrel on a 0.9 mb/d surplus. 

Goldman expects oil demand to continue growing for another decade, driven by rising total energy demand alongside GDP growth, and the ongoing challenges of decarbonizing air travel and petrochemical products. 

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