Goldman Sachs (GS) revised up its Brent Oil price forecast for December 2023 by $5 to $95 a barrel, as well as increasing the December 2024 forecast by $3 to $100 a barrel, in their research note published on Sunday. The latest upward revision of GS’ oil forecasts could be linked to a surprise output cut from the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, known collectively as OPEC .

Also read: Breaking: WTI crude oil jumps 7.0% to $81.00 on surprise OPEC output cut 

Key findings

Today's surprise (production) cut is consistent with the new OPEC doctrine to act preemptively because they can without significant losses in market share.

The risks around cutting production have become asymmetric given how short positioning has become, and because price increases in response to tightening events can be stronger when the market is short.

While the move was surprising, the decision reflects important economic and likely political considerations.

Output reduction could provide a 7% boost to oil prices, contributing to higher Saudi Arabia and OPEC oil revenue.

The refusal to refill the US SPR (Strategic Petroleum Reserve (SPR) in fiscal year 2023, although (US benchmark) WTI lows that were previously characterized as sufficient to refill, may have contributed to the OPEC decision to cut too.