Goldman Sachs: Any attempt by OPEC to save oil prices will be ‘self-defeating’

Oil Production and OPEC

A new report from Wall Street firm Goldman Sachs says any attempt by OPEC to save sliding oil prices will be “ultimately self-defeating.”

While oil surged back to $34 a barrel in late January, the investment bank believes it was a slight rebound that will eventually witness prices dropping to $26 a barrel.

“It may already be too late for OPEC producers to be able to prevent another large decline in prices,” Goldman analysts wrote in a research report published on Sunday.

The investment firm says it will take took long for production cuts to be enacted while oil stockpiles will continue to swell all over the world.

That skepticism from Goldman and other oil analyts helped drive crude 6% lower on Monday to around $31.75 a barrel.

The average cost of a gallon of gasoline dropped to $1.79 on Monday, down from $2.06 one year prior, according to AAA.

While falling oil prices have helped at the pump, investors have focused on the downside of such moves, specifically shrinking profits at energy companies, bankruptcies caused by those rapidly shrinking profits, and troubles caused in emerging markets who rely on higher oil production prices to float their economic success.

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Recent gains in oil pricing were based on the hopes that OPEC would hold an emergency meeting and agree to cut production across the board.

In the meantime, Goldman Sachs isn’t buying into the idea that OPEC will help stabilize oil prices.

“We continue to view a coordinated production cut as highly unlikely and ultimately self-defeating,” Goldman wrote in the report.

Goldman believes giving in now would allow US production, which is slowly declining, to quickly rebound, forcing Saudi Arabia to give up some of its precious market share to its main competitor.

“All a production cut would do at this point is throw a lifeline to US shale and other non-OPEC producers,” said Joe McMonigle, former chief of staff of the Energy Department who is currently an analyst at Potomac Research Group.

“There’s zero chance of a change in [OPEC] production,” McMonigle said.

Written by Jeff Springer

Jeff Springer

Jeff Spring is the Finance & Markets Editor at He's currently spending his days backpacking across Europe. While he may be living outside of the United States, he stays connected to American financial markets and M&A's more than is probably healthy for any single person. His love of a good book and a Bloomberg terminal can't be understated. He can be reached at