The commodities team at Goldman Sachs has analyzed the recent surprise attacks carried out by Hamas in Israel. They have examined the short-term and long-term effects these attacks will have on global supply and demand balances.
Immediate concerns surround the possibility of any normalization in the relationship between Saudi Arabia and Israel. An exclusive report in The Wall Street Journal highlighted U.S.-led attempts to establish a deal where the Saudis would increase oil production by 2024 if they recognized Israel and negotiated a defense pact with the United States. However, Goldman Sachs and other banks now believe that the weekend attacks significantly diminish the chances of such an agreement.
Goldman Sachs predicts that Saudi Arabia will partially roll back the voluntary production cut of 1 million barrels per day implemented for the latter half of 2023. However, they now anticipate that Saudi Arabia will maintain production at 9 million barrels per day until the first quarter of 2024. Only after that period, they expect an additional 250,000 barrels per day of crude oil to enter the market. The decrease in prices in late September and early October, combined with no substantial evidence of large crude stock withdrawals globally, make an early reversal of the voluntary cut less likely.
