{"id":5854,"date":"2023-06-06T14:38:58","date_gmt":"2023-06-06T14:38:58","guid":{"rendered":"http:\/\/roydadnaft.ir\/English\/?p=5854"},"modified":"2023-06-06T14:43:05","modified_gmt":"2023-06-06T14:43:05","slug":"saudi-cuts-unlikely-to-lift-oil-prices-to-high-80s-low-90s-citi-says","status":"publish","type":"post","link":"https:\/\/roydadnaft.ir\/English\/5854\/","title":{"rendered":"Saudi cuts unlikely to lift oil prices to high $80s-low $90s, Citi says"},"content":{"rendered":"
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Roydad Naft News Agency – Top crude exporter Saudi Arabia’s pledge to deepen output cuts is unlikely to underpin a sustainable price increase into the high $80s-low $90s, Citi said in a note on Tuesday, even as other brokerages signalled a bigger deficit in the second half.<\/p>\n\n\n\n

Weaker demand, stronger non-OPEC supply by year-end, potential recessions in the U.S. and Europe, and lower growth in China could push prices lower this year and in 2024, Citi analysts said.<\/p>\n\n\n\n

“The likelihood that Saudi Arabia would tackle this on its own on a sustained basis is quite low,” Citi said.<\/p>\n\n\n\n

Citi forecast Brent to be range-bound, averaging $81 a barrel this year.<\/p>\n\n\n\n

Oil prices retreated, with Brent crude trading around $75 a barrel, as worries over global growth doused a rally following Saudi Arabia’s announcement.<\/p>\n\n\n\n

“A back-of-envelope calculation shows the need from a Saudi perspective for a ten-dollar rally in crude oil for the one million barrels cut to be revenue neutral,” said Saxo Bank strategist Ole Hansen.<\/p>\n\n\n\n

For now, the main oil price driver continues to be concerns about global growth and demand, not only in China, but also the U.S. and other key consumers, Hansen added.<\/p>\n\n\n\n

HSBC also maintained its Brent forecast of $93.5 a barrel for the second half of 2023, predicting negative macroeconomic factors would offset some support from the cuts.<\/p>\n\n\n\n

However, UBS and Barclays were slightly more upbeat.<\/p>\n\n\n\n

UBS analysts forecast Brent at $95 a barrel by end-2023 with a supply deficit seen rising above 2 million bpd, predicting the market would remain in a “meaningful deficit” following the broader OPEC+ agreement to extend voluntary cuts to end-2024.<\/p>\n\n\n\n

Barclays expected Riyadh’s voluntary reduction to slightly boost deficits in the second half of 2023.<\/p>\n\n\n\n

Other analysts\u00a0have also said a global supply shortfall could deepen in the third quarter following the cuts, pushing Brent towards $100 a barrel by year-end.<\/p>\n

Updated on