Oil price forecasts predict $110 per barrel amid OPEC+ production cut

Yahoo Finance's Ines Ferre looks at how oil markets are performing amid news that OPEC+ is cutting its production.

Video transcript

DAVE BRIGGS: Let's get you up to speed now on the oil market, still ingesting that historic cut from OPEC+. Let's bring in Ines Ferre for the latest price action. Want to get your thoughts on some White House comments first, but what are we seeing today?

INES FERRE: Yeah, that's right. So today, we did see oil settle higher for the fourth straight day. And of course, after that 2 million barrel per day cut that was announced by OPEC+ this week, Goldman Sachs now saying that it could see oil going up to as high as $110 per barrel in the first quarter, 115 by the first quarter of 2023. And if the cuts were to last through December of 2023, then you could see these elevated prices higher.

And some analysts are saying this really goes to show you the gravity, so to speak, of how OPEC sees the possibility of a worldwide recession by cutting by this much. Now, some countries don't meet their quota already, so it's not necessarily 2 million barrels per day. But nonetheless, the only thing that would really drive prices lower were to be a serious recession. And we did see from 2008 to 2009, when you saw oil prices go from $145 per barrel all the way down to 35 by-- in five months' time.

DAVE BRIGGS: And I mentioned some comments from the White House, Ines. Amos Hochstein says he doesn't think increased prices will be a result of this. He also said he thinks it's well below 2 million, in actuality, closer to 900,000. And then he qualified that by saying, if there are any net cuts at all, he says some countries will cut. Others will increase. What do you make of those comments?

INES FERRE: Yeah, that's right. So he's basically reiterating that some countries, as you mentioned, are not meeting their quotas. So you can't really say that it's 2 million barrels per day. Also, talking about the SPR and that there is some space to release more of the Reserve.

Look, nonetheless, you did have officials from the White House basically saying that they're disappointed by this. They're disappointed by OPEC+'s decision. And some analysts would say that it's as much of a decision about supply and demand as it is also a political decision because certainly, this is a snub towards the US.

DAVE BRIGGS: Yeah, that visit and that fist bump with MBS certainly looks unproductive. Ines Ferre, thanks so much. Appreciate that.