Goldman Sachs Projects $100 Per Barrel of Oil in 2022,2023

Emmanuel Addeh in Abuja with agency report
Goldman Sachs expects average global oil demand to hit record levels in the next two years on the back of rising demand for aviation and transport, as well as infrastructure construction.

Goldman said that there will be a steady growth in global oil demand until the end of this decade to about 106 million barrels per day (bpd), as it expects only a gradual energy transition.

The leading global investment banking, securities and investment management firm which provides a wide range of financial services in its forecast said that crude oil prices could hit $100 in 2023 as demand growth outpaces supply growth.

“You’ve already had record-high demand right before this latest variant and you’re adding higher jet demand and the global economy is still growing,” Damien Courvalin, Goldman’s head of energy research,” said.

He added: “You’ll see how we will average a new record high in demand in 2022, and again, in 2023.”
While the recovery has hit a speed bump with rising COVID-19 cases in parts of the Northern Hemisphere during winter, lockdowns remained limited, while high frequency mobility data was also showing limited impact, he said.

Furthermore, he stated that electric cars will dent gasoline demand, but that trucks and planes are still a very long way away from decarbonising.

“You’re selling nearly 6 million EVs (electric vehicles) a year now. That still is less than 100,000 barrels per day of demand destruction on a 100 million barrels per day market so it’s still a small piece.

“There’s insufficient supply in the face of strong demand. Oil prices have to be higher to overcome the higher cost of capital to fund projects,” Bloomberg quoted him as saying.

But the upside risks for triple-digit prices include cost inflation for drillers and a potential supply shortfall coupled with fears over shrinking access to funding for new oil and gas projects.

According to Goldman’s analysts, the recent drop in oil prices—fuelled by fears about the latest coronavirus variant—was an overreaction.

The bank has become the second this month to maintain its bullish stance on oil despite the recent dip.