Brent crude to hit $75 as demand recovery outstrips supply: Goldman Sachs

Brent crude to hit $75 as demand recovery outstrips supply: Goldman Sachs

DUBAI: The price of a barrel of Brent crude is forecast to reach $75 in the third quarter of this year, according to energy analysts at US investment bank Goldman Sachs.

The projection comes in the wake of a sustained rally in global oil prices as continued restrictions on supply - led by Saudi Arabia after its surprise 1 million barrels per day (bpd) voluntary cut in February - met increased demand as coronavirus disease (COVID-19) vaccines being rolled out around the world increased hopes of an economic recovery.

"We now forecast that oil prices will rally sooner and higher, driven by lower expected inventories and higher marginal costs - at least in the short run - to restart upstream activity,“ a new research note from Goldman Sachs' Damien Courvalin said.

The effect of the recent freezing weather in Texas, which has cut some 2 million bpd from American output, will be counterbalanced by a decline in economic activity in the state because of the freeze.

The analyst noted, however, that there remained "concerns“ over the possibility of a return of Iranian production, as the administration of US President Jo Biden sought to resume talks with Tehran over its nuclear strategy.

Ongoing strength in global