Goldman Sachs revises Brent price projection to $95

Surprise OPEC+ production cut sends oil prices soaring

By Nadia Elbilassy | @Nadia Elbilassy | 17 April 2023

OPEC+ challenges how to defeat recession possibilities-20230405-142339 (1)
  • Oil prices jump more than 6% in April

  • The cut encapsulates almost 3.7% of the total global demand

  • Subsequent factors favor higher oil prices

The recent rise in oil prices can be attributed to the weakening of the US dollar in the market due to the anticipation of the end of the rate cycle. Typically, when interest rates increase, the dollar strengthens while oil prices decline. However, the current market sentiment favors a weaker dollar and consequently, higher oil prices.

Both oil benchmarks opened with a gap 2 weeks back jumping more than 5% startling markets. After OPEC+ major intervention to stabilize prices, it’s not news to know OPEC+ is due for intervention for price stability but markets clearly did not expect the extent of the surprise cut and the effects it will have on oil prices.

Goldman Sachs Group's commodity analysts have revised their year-end price projection for Brent crude, the worldwide benchmark, to $95 per barrel, which is $5 higher than their previous estimate.

Brent crude prices are found stabilizing near $86 dollars having jumped $6 on the release of the decision continuing to the upside. Prices continued to trade in a side-way movement but improved demand prospects from China’s projected increase in travel demand lifted prices even further.

Why the cut shocked markets!

The cut encapsulates almost 3.7% of total global demand. The cut surprised markets as expectations saw the alliance sticking to 2 million bpd cut decision taken last October till end of 2023. Which is why the additional 1.6 million is immensely a large drop to the projected supply amounts.

Demand prospects saw a shift following China’s consumer inflation rate in March, which slowed down indicating lack of demand in the second largest economy in the world. As a result, there are expectations that Beijing may implement measures to stimulate economic growth. Which could in turn boost demand for oil once again.


For WTI, if prices settled above 50 EMA it will lead to further upside movement to test the 100 SMA near $84.80, and even higher to $87 previously reclaimed resistance level. However subject to a volatile US dollar, all eyes will be on the next Fed meeting to decide on the future path of the USD.

To the Downside, $81 acts as a strong support followed by $79, if broken the declined could lead to a further extension all the way to $77.