- Oil benchmarks could pass $115 a barrel by the end of the first quarter of 2023, according to Goldman Sachs' Jeff Currie.
- Tightening supply will drive crude prices higher, the bank's head of commodities research said.
- Currie added that OPEC+ members have given themselves "optionality" to raise oil production if demand climbs.
Crude oil prices could jump to $115 a barrel by April next year as several factors squeeze supply, Goldman Sachs' head of commodities research has said.
"You have a relatively tight supply situation going into 2023 that we think will create significant upside," Jeff Currie told CNBC Monday.
He pointed to a US halt to releases from its Strategic Petroleum Reserve to manage prices, the coming European Union ban on Russian crude due in December, and a lack of drilling leading to disappointing supply of US shale production. These could all drive crude prices higher.
"Our target on oil is $115 a barrel in the first quarter, but there's upside risk on that," Currie said.
Crude oil prices have risen in this year, thanks to the fallout from Russia's war on Ukraine. Western sanctions against Moscow have squeezed supply.
Brent crude futures, the international benchmark, have jumped 20.7% year-to-date to trade at $93.81 a barrel at last check Tuesday. Meanwhile, WTI crude futures — the US benchmark, have climbed 16.9% to $87.34 a barrel in the same period.
The OPEC+ group of oil producers — which includes Russia and Saudi Arabia – said in early October they would cut oil production quotas by 2 million barrels a day. Strategists expect the move to drive up oil prices, as it could impact supply.
The group said it was looking to build up surpluses in case a global recession leads to a fall in demand. Many investors are concerned about a slowdown in China, the world's second-biggest economy, where COVID-zero restrictions have returned and will likely hit industrial activity.
Currie said that the production cuts had left OPEC+ with some "optionality" that could help boost supply if the global economy unexpectedly rebounds by April.
"The motivation for the OPEC production cut was concerns around a recession," he told CNBC. "Let me remind you that 90% of the CEOs in America tend to agree with them."
"It's not our base-case forecast and they're left with the optionality to be able to increase production," Currie added.