Offering some consolation to the market’s fears over tighter oil supplies, analysts at Goldman Sachs noted that an oil supply agreement between Saudi Arabia and the United Arab Emirates to be a bullish catalyst for prices over the coming months.
Reuters reported on Wednesday that both the Middle East oil producers had reached a compromise over OPEC+ policy.
"Such an agreement would help bridge the (modest) divide between both countries and help remove the (low probability) OPEC+ tail risks of a potential price war or insufficient production growth,"
"We believe that risks to our bullish oil price forecasts are skewed to the upside, with the catalyst for such a move higher shifting from the demand to the supply side."
Expect $2 to $4 per barrel upside risk to its $80 per barrel summer forecast and $75 per barrel for its 2022 Brent price forecast.
“A lack of an Iran nuclear deal would increase its 2022 price forecast by $10/bbl.”
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