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LONDON: Goldman Sachs has slashed its forecast for oil prices by nearly 10 per cent, citing weak demand in China and a glut of supply from the sanctioned countries, including Russia, according to a media report.
The Wall Street bank now thinks Brent crude, the global oil benchmark, will cost $86 a barrel in December, compared to its previous estimate of $95, while West Texas Intermediate (WTI) crude will fetch $81 a barrel, down from $89, CNN reported.
That's despite Saudi Arabia's recent decision to slash its own output, and a pledge by other members of the OPEC+ alliance of leading oil producers to extend a policy of supply restraint into next year, the report said.
Extra supply of around 800,000 barrels a day, mostly from sanctioned countries such as Russia, Iran and Venezuela, is behind the "bulk of the softening" in its price forecasts, the bank's commodities analysts said in a research note.
"Russian supply has nearly fully recovered despite the decision by many companies to stop buying Russian barrels, and [effectively] a ban of Western financial and logistical services," the bank wrote.
Western firms can work with Russian producers only if they respect the price caps imposed on the country's oil by Group of Seven countries.
Since late May, prices for Brent and WTI have fallen 6.8 per cent and 7.6 per cent, respectively, to $73 and $69 a barrel, as disappointing economic data from China has dampened the global demand outlook, CNN reported.