Brent oil prices could rise to $65 per barrel by summer 2021, Goldman Sachs said on Monday, driven by output cuts in Saudi Arabia and the implications of a shift in power to the Democrats in the United States.

The Wall Street investment bank had previously predicted oil would hit $65 by year-end.

The Democrat-led sweep of the US Senate runoff elections and Saudi Arabia's recent announcement of unilateral production cuts have left commodity markets with a "tighter" medium-term outlook, analysts at the bank said in a note.

Last week, the bank said Saudi Arabia's pledge to cut its output by more than required under its pact with other OPEC+ producers points to weakening oil demand following new COVID-19 lockdowns.

Brent crude fell as much as $1 per barrel on Monday, to trade around $55. Oil prices shed about 20% in 2020.

The bank forecast returns of 5.8%, 9.5% and 10.2% on commodities over a three-, six- and 12-month period respectively on the S&P/GSCI Goldman Sachs Commodity Index (GSCI).

Precious metals were seen returning 28.7% over a 12-month period, followed by energy at 13.7% and industrial metals at 13.3%, while agriculture would lose 4.4%, the bank said.

"Given the magnitude of the recent rally, however, markets are likely to consolidate near-term," the bank said.

The bank had in November forecast returns of about 3.4%, 9.4% and 26.8% respectively over a three-, six- and 12- month period.