Financial services firm JP Morgan has downgraded its expectations for the price of Brent Crude this year from $90 to $81 per barrel.
With the OPEC+ group having cut production substantially in April and Saudi Arabia more recently announcing a cut of a million barrels per day (bpd) in its production, many forecasters had previously expected the oil markets to tighten later in the year, leading to significantly higher oil prices. Developments in the US banking sector and a surprising recovery in the supply of Russian crude now mean that the supply deficit will be smaller, meaning less upward pressure on oil prices. Barring some new significant geopolitical crisis, prices are no longer expected to reach $100 per barrel.
Goldman Sachs also recently revised down its estimate from $95 to $86 per barrel, citing similar reasoning. Its analysts said in a recent note that despite a significant initial decrease:
“…Russian supply has nearly fully recovered despite the decision by many companies to stop buying Russian barrels. The extra Saudi cut and our expectation that OPEC+ will extend half of its April voluntary cut in 2024 will likely only partly offset these bearish shocks.”
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