Goldman Sachs (GS) - Get Report says it's likely that benchmark Brent oil prices will rise as demand from emerging markets outweighs worries about higher production, rising inventories and risks of a global trade war.

"We now forecast a moderately tighter oil market through the second quarter of 2019 than previously despite core OPEC and Russia production reaching new record highs by next summer and inventories already below normal levels," Goldman analysts, including Damien Courvalin and Jeffrey Currie, wrote in a June 18 research note. "While concerns over OPEC production and demand may continue to weigh on prices in the near term, this leads us to reiterate our forecast for Brent prices to rally further, with risks to our peak $82.50 per barrel forecast still skewed to the upside later this year."

Prices erased earlier losses on Monday as members of the Organization of Petroleum Exporting Countries are reportedly considering a modest production increase in the range of 300,000 and 600,000 barrels of oil per day, Bloomberg reported, which is less than analysts' expectations of about 1 million barrels per day. Brent crude prices have fallen about 2% in the last month. OPEC and non-OPEC members, led by Russia, previously pledged to reduced output by 1.8 million barrels per day through the end of 2018 as a means of boosting oil prices, but U.S. sanctions on OPEC members, Iran and Venezuela, have prompted supply disruptions.

On the demand side, the firm forecast above-consensus demand growth of about 1.75 million barrels per day year over year in 2018, as emerging markets and developed markets exhibit the most robust growth. To be sure, Goldman reduced this outlook by 100,000 barrels per day to cautiously account for potentially weaker emerging markets growth. The firm reiterated its 2019 demand growth forecast of 1.6 million barrels per day.

Brent crude, the global benchmark, jumped 1.2% to $74.27 at 12:00 p.m. New York time. Meanwhile, U.S. benchmark West Texas Intermediate crude futures for July delivery rose 0.1% to $65.11.

A tight oil market requires more shale production, Goldman said, but producers may have to look outside west Texas' oil-rich Permian basin due to pipeline constraints.

"As a result, we believe the oil market has moved up the shale cost curve to incentivize more drilling in other shale basins, consistent with the repricing higher of long-dated Brent prices in May," the Goldman analysts said. "With insufficient pipeline capacity out of Cushing, Brent spot prices will further have to incentivize railing of inland crude to the US coasts, keeping the WTI-Brent differential above pipeline economics."

Notably, oilfield service giant Schlumberger Ltd.  (SLB) - Get Report , which is an Action Alerts PLUS holding, anticipates an increase in drilling projects.

"Over the next few quarters, Schlumberger is undergoing an 'unprecedented' ramp in integrated drilling projects," Jim Cramer and his AAP team said in a note to subscribers. "This is likely a result of the global environment being underinvested which will be a tailwind to Schlumberger's best of breed services."

Shares of the Houston-based Schlumberger rose 0.1% to $66.90.