Goldman Sachs forecasted that oil price will hit $135 in the second half of 2022.
Goldman Sachs increased its Brent oil price forecasts by $10 to $135 a barrel for the period between the second half of 2022 and the first half of next year, reasoning that a structural supply deficit was still unresolved.
That marks a substantial jump from their earlier call for global prices to average $125 in the third quarter.
The Goldman analysts said stockpiles also need to mount to offset expected new demand momentum in China and production declines in Russia.
China, the world’s largest crude consumer, pulled back on oil demand this spring amid a coronavirus surge that galvanized government officials to order new lockdowns. This included Shanghai, the country’s largest city, with about 25 million residents.
But authorities in that city and others in China began easing restrictions this month, opening a pathway for a burst in summer activity and demand for fuels derived from crude.
Additionally, the United States banned imports of Russian oil this year in protest of the Kremlin’s invasion of Ukraine. In additional to that, European Union leaders recently agreed an embargo on Russian crude imports that will take full effect by the end of 2022, aiming to halt 90% of Russia’s crude imports into the 27-nation bloc by year-end.
The EIA said its forecast incorporates the assumption that the European Union will follow through on its plan to ban seaborne crude oil and petroleum product imports from Russia. However, the forecast does not include potential restrictions on shipping insurance because details are not known.
And while the United States and OPEC+ are expected to modestly increase production, the EIA expects Russia’s production will tumble by 1.1 million barrels per day between May 2022 and the end of 2023. That is a steeper decline than the EIA previously expected.
