OPEC and its allies agreed to a modest increase in oil production, which will contribute to a likely glut in the global market in the year ahead but will help Saudi Arabia win political points with US President Donald Trump.
Brent crude prices held steady on Tuesday, as the production increase was below what many traders anticipated. But a dip is likely in the making, with Goldman Sachs predicting per-barrel prices close to $50 by next year — from above $60 now — and the Macquarie Group bank forecasting a surplus of “cartoonish” proportions.
That will create opportunities for smart traders who can sock oil away in storage for when prices rise later on, Bloomberg’s Javier Blas argued. And it will help Riyadh score points with the White House by contributing to low gasoline prices for US drivers, as well as allowing the kingdom to re-take some of the global market share it lost in recent years by holding barrels back. But there’s another wild card in the deck that could push prices in the opposite direction: Ongoing attacks by Ukraine on Russia’s oil network could soon make a serious dent in global supplies.