Oil prices will back away from $80 a barrel over the next six months as Saudi Arabia and its allies add more supplies to the market, Barclays said in a research note on Tuesday.
The bank said the more bullish outlook held by some of its peers "rests on shaky ground," and the market is underestimating the Saudis' ability to manage the market. Saudi Arabia — along with Russia, Kuwait and the United Arab Emirates — has vowed to meet global oil demand as U.S. sanctions cut off Iranian exports later this year and Venezuela's output continues to decline.
Brent crude has traded between about $77 and $79.50 this month, but Barclays forecasts it will average $73 a barrel in the second half of 2018. That's up $3 a barrel from its last forecast, due to the looming U.S. sanctions on Iran and recent supply disruptions in Libya, but Barclays said it doesn't see as much upside for oil as other banks.
Morgan Stanley recently raised its six-month outlook for Brent to $85 a barrel after the Trump administration took a more hawkish stance on cutting off Iran's oil exports. Goldman Sachs warned last month that prices could overshoot its call that Brent will peak at $82.50 this summer.