Oil Prices Surge as Russia Cuts Output, Goldman Turns Bullish

Crude oil futures experienced an upturn on Monday, following the escalation of geopolitical tensions due to attacks in Russia and a bullish outlook for commodities presented by Goldman Sachs. This increase was particularly notable as it followed a drone attack over the weekend on Russia's Kuibyshev oil refinery that led to the cessation of one of its two main refining units, effectively halving its capacity. 

This attack marked the eighth assault on Russian refineries within the past three weeks. As reported by Reuters, this latest strike is estimated to take an additional 35K barrels per day (bbl/day) out of operation from Russia's refinery capacity. When combined with normal maintenance downtimes, this brings a total of approximately 400K bbl/day offline. 

StoneX's energy team leader Alex Hodes commented on these developments stating that they would significantly impact production numbers. Furthermore, it has been reported that in response to these attacks and other factors, Russia’s government has instructed companies to decrease their Q2 oil production. The aim is reportedly to ensure output targets align with those pledged to OPEC+, specifically targeting a figure of 9M bbl/day by June end. 

Adding fuel to already volatile circumstances are allegations made by Vladimir Putin linking Ukraine with Friday’s terrorist attack at Moscow concert hall which resulted in more than 130 fatalities; Islamic State terrorists have since claimed responsibility for this act. 

In addition to geopolitical concerns shaping crude oil futures' trajectory upwards are economic factors brought forth by financial giant Goldman Sachs. Analysts at Goldman Sachs predict commodities will see significant gains throughout this year as central banks worldwide lower interest rates – actions aimed at bolstering industrial and consumer demand levels. 

Goldman analysts including Samantha Dart and Daan Struyven believe raw materials like copper, aluminum, gold and notably oil could potentially yield returns around 15% throughout this year given declining borrowing costs coupled with manufacturing recovery efforts amidst continued geopolitical risks. 

"We find that U.S. rate cuts in non-recessionary environments lead to higher commodity prices, with the biggest boost to metals (copper and gold in particular), followed by crude oil," noted the Goldman group. They added that these positive impacts on pricing typically increase over time as growth impulses from eased financial conditions gradually permeate through markets. 

In a similar vein, Jeff Currie, former head of commodities research at Goldman Sachs and currently associated with Carlyle Group, also recently projected gains for commodities resulting from Federal Reserve's interest rate cuts. 

These intertwined geopolitical events and economic forecasts have created an environment ripe for change within the global energy market – changes which are already being reflected in rising crude oil futures. As Russia grapples with refinery attacks and international allegations whilst central banks globally strive to stimulate demand via lowered rates, all eyes will be watching how these developments shape future trends within this sector.