Following OPEC’s decision to cut production, Brent Crude Oil looks well supported at $80/bbl. Economists at ANZ Bank expect Oil prices to top $100/bbl in Q3 2023.

OPEC production cut to further support Oil market

“A surprise move by OPEC has the potential to push the implied Oil market deficit as deep as 2mb/d in coming months. This is likely to reverse recent Oil price weakness, lifting prices into the northern hemisphere summer.”

“Expectations of tightness had already been rising amid China’s reopening, although that was tempered by the uncertain macro backdrop. At the least, this move essentially protects the market against such risks. Moreover, it sends a strong message to the market that OPEC is willing to defend a price floor above $80/bbl. It does this with the knowledge that there will likely be little response from other producers. Growth in US supply remains muted and other marginal suppliers have limited spare capacity.”

“We now expect Brent Crude to break through $100/bbl in early Q3 2023 and likely hold around that level into year-end.”