Weak demand from China and an excess supply of oil from countries that have been subjected to international sanctions are the main factors that will push the price of black gold down compared to the original projections. As a result, a barrel of oil could be up to a tenth cheaper at the end of this year than recent estimates from analysts at the American investment bank Goldman Sachs suggested.

The price of Brent crude is expected to hover around $86 per barrel by the end of this year, according to the new estimates by analysts at Goldman Sachs.

The previous estimate spoke of $95 per barrel. The projected price of oil at the end of this year should therefore be about a tenth lower than what the previous forecast anticipated. In the case of WTI crude, Goldman Sachs now estimates a price of around $81 per barrel, instead of the original $89.

The expected reduction in oil prices comes despite the announced production cut by the OPEC+ group of countries. However, the reasons are not surprising.

There is currently oil on the market from sanctioned countries such as Russia, Iran, or Venezuela, with a volume of around 800,000 barrels per day.

The price of oil is also being pushed down by China’s relatively weak economic growth.

Brent crude fell below $72 per barrel earlier this week, the lowest level since the end of 2021. However, there was a slight increase on Tuesday in response to the announcement by the Chinese central bank that it is lowering its benchmark interest rates.

This is an attempt to support the slowing Chinese economy.

Source: Lawler – Reuters, Cooban – CNN.com