Oil prices hit two-week high amid Russia-Ukraine tensions; Goldman Sachs forecasts $80 brent in 2024

Oil prices edged higher on Tuesday, reaching a two-week peak as markets responded to ongoing geopolitical tensions surrounding the Russia-Ukraine war. International Brent crude futures dropped slightly by 56 cents, or 0.9%, settling at $61.52 per barrel.

Despite recent volatility, Goldman Sachs expects Brent crude to average $80 per barrel in 2024, driven by a forecasted surplus of 0.4 million barrels per day (mb/d) next year, although geopolitical uncertainties and a potential supply deficit remain factors. The bank projects a price range of $70 to $85 for Brent crude, noting that while high spare capacity limits significant price increases, the ability of OPEC and shale supply to adjust prices reduces the likelihood of steep drops.

Oil prices initially surged on news that OPEC+ was considering delaying a planned increase in oil output, which was set to start in January 2025. The news also coincided with speculation over the potential economic impact of U.S. President-elect Donald Trump’s proposed trade tariffs on Mexico and Canada. By mid-afternoon, Brent crude futures rose by 42 cents, or 0.58%, to $73.43 per barrel, while U.S. West Texas Intermediate (WTI) crude climbed 45 cents, or 0.65%, to $69.39 per barrel.

Market activity briefly spiked by more than $1 per barrel during the session. However, oil prices later settled as news emerged that OPEC+ nations are re-evaluating their production plans in response to slowing demand from China and other global markets, along with increasing oil output from outside the group. OPEC+ was initially planning gradual output increases over the next two years, but these plans are now in question due to these changing market dynamics.