Goldman Sachs lowered its 2023 outlook on the price of Brent Crude as oil supply strengthens and demand weakens, putting it at just $86 a barrel by the end of 2023.
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After initially predicting $95 a barrel, the investment firm said in a note on Monday, "Significant supply beats from Iran and Russia have driven speculative positioning to near record lows."
Prices of both Brent and U.S. oil fell on Monday.
The company also said supply constraints in other countries were due to inflationary pressures and sanctions enforcement, but "previously constrained productive capacity has been unlocked."
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Despite the change in prediction, Goldman said their constructive oil call remains unchanged and includes demand growth for service-oriented refined products, a slowdown in U.S. supply and OPEC’s pricing power.
Meanwhile, the bank also lifted its 2024 supply outlook from Russia, Iran and Venezuela.
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Over the last year, the investment bank said depressed positioning and supply beats explain 70% of the oil selloff, while over the last two months, oil prices have fallen $10 per barrel despite Saudi Arabia’s announcement to deliver another extended production cut.
By 2024, Goldman Sachs predicts rising EV demand, slowing U.S. supply and OPEC cuts will put the price of Brent Crude at $93 a barrel.
