Via an overnight note from Goldman Sachs on oil. Despite the price drops GS are still bullish:
- our conclusion is that under our adverse scenario, Brent’s fair value would be of $120-110/bbl in 2H22-2023
- down from our $135 and $125/bbl forecasts
- but still well above market forwards of $96
GS add that their 'worst case' scenario still implies $90 to $105 / barrel.
On supply
- We expect Russian flows only modestly decline from current levels this year, base case ban in 1Q23 still
- We expect a US-Saudi agreement to result in a modest increase in OPEC+ output
- Iran deal unlikely, especially in context of Saudi-US agreement
and demand, GS note that China demand has recovered faster than expected despite recent lockdowns
