Supply Increases And Demand Falls
Goldman Sachs analysts have made a significant downward revision to their oil price forecast, citing increasing supply and sluggish demand for crude. In their latest report released on Sunday, the investment bank adjusted their Brent outlook for December from $95 to $86 per barrel. Similarly, they lowered their WTI forecast for December from $89 to $81 per barrel.
- This marks Goldman's third downward revision in the past six months. Notably, the revision comes despite Saudi Arabia's announcement last week to cut production by an additional million barrels per day starting in July.
- However, the oil cartel, OPEC, has not made any changes to its planned production cuts for the rest of the year.
Supply Increases From Russia And Iran
Jeffrey Currie, the Global Head of Commodities Research at the Goldman Sachs, highlighted the significant supply increases from Iran and Russia, which have led to near-record low speculative positioning in the market. Russia, despite facing Western sanctions, has managed to maintain resilient oil production, with Deputy Energy Minister Pavel Sorokin stating that Moscow's output will remain stable until 2025. Despite companies refraining from purchasing Russian barrels, the supply drop was temporary, and production has almost fully recovered.
- Goldman Sachs has also revised its oil supply forecasts for countries facing sanctions, indicating upward revisions for Russia, Iran, and Venezuela for 2024.
- The report acknowledges that a successful agreement between the U.S. and Iran could potentially add at least one million barrels per day in crude exports. However, market analysts remain cautious about the complexity and challenges associated with such a deal.
U.S. - Iran Deal?
Iranian Foreign Ministry spokesperson Nasser Kanaani has officially confirmed that Iran and the United States engaged in indirect talks last month in Oman. These talks mark the first known indirect engagement between the two nations in several months, occurring against the backdrop of increasing concerns within the White House regarding Iran's nuclear advancements.
- Kanaani's remarks on Monday represent the Iranian government's initial acknowledgement of the indirect talks, while the Biden administration has yet to publicly confirm their occurrence.
- During a briefing with reporters, Kanaani disclosed that Iran had exchanged messages with the U.S. concerning the lifting of sanctions. Notably, he emphasized that Iran is not entertaining discussions regarding an interim agreement or any other arrangement that deviates from the parameters outlined in the 2015 nuclear deal.
- Behind the scenes, Brett McGurk, the White House Middle East coordinator, embarked on a clandestine trip to Oman on May 8 to engage in discussions with Omani officials regarding potential diplomatic outreach to Iran concerning its nuclear program.
- An Iranian delegation, including Ali Bagheri Kan, Iran's chief nuclear negotiator, arrived in Oman concurrently.
Overall, the overarching objective of the indirect exchange of messages between the Biden administration and Iran was to achieve an "understanding" regarding avenues for de-escalating Iran's nuclear program, addressing Iran's behavior in the region, and discussing its involvement in the Ukrainian conflict.
Please note that this article does not constitute investment advice in any form. This article is not a research report and is not intended to serve as the basis for any investment decision. All investments involve risk and the past performance of a security or financial product does not guarantee future returns. Investors have to conduct their own research before conducting any transaction. There is always the risk of losing parts or all of your money when you invest in securities or other financial products. Please note that the writer of this article is not registered as a financial advisor.