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Staff of Reuters 2 minutes ReadFILE PHOTO: A tangle of crude oil pipes and valves is shown during a tour of the Strategic Petroleum Reserve in Freeport, Texas, by the Department of Energy on June 9, 2016. RICHARD CARSON/REUTERS (Source: Reuters) Goldman Sachs said on Tuesday that the collapse of OPEC+’s oil output talks has thrown the group’s production path into doubt, but that it still expects a Brent price of $80 per barrel this summer and a gradual increase in output early next year. After clashing last week when the United Arab Emirates rejected a planned eight-month extension to output cuts, ministers of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, called off oil output negotiations on Monday and established no new date for them to reconvene. On Tuesday, the deadlock boosted oil prices to multi-year highs. “The differences between both sides appear to be surmountable as they agree to ramp up output through the end of the year, with the remaining significant uncertainty for 2022 oil balances making a pledge to any long-term commitment superfluous today,” the bank said in a note. As the pandemic hit, OPEC+ agreed to record output cutbacks of around 10 million barrels per day (bpd). Goldman maintained its forecast for a steady increase in output in the second half of this year, followed by comparable increases in the first quarter of 2022 to finish the inventory decline. Given its expectations for increased demand, a gradual global recovery, and a reduction in producing capacity, the UAE, Saudi Arabia, and Russia are expected to bring production to or near quarterly average records, assisting in meeting all of their preferences. “While the threat of a new OPEC+ price war is no longer insignificant, its negative price impact would be mitigated by a global market that began the year with a 2.5 million barrels per day deficit and required an additional 5 million barrels per day in production by year’s end to avoid critically low inventories,” Goldman added. Eileen Soreng contributed reporting from Bengaluru, and Chizu Nomiyama edited the piece./nRead More

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