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While many may maintain the stance that they do not know what is next for crude oil, OPEC+ is stepping up its responsiveness and is ready to meet to make any necessary adjustments to oil supply.
Damien Courvalin, the Head of Energy Research at American multinational investment bank and financial services company, Goldman Sachs Group Inc (NYSE: GS) has predicted that the price of crude oil could rise as high as $100 from next year onwards. As reported by CNBC, Courvalin’s position is influenced by the belief that demand for the product in the global market could rise beginning in 2022 as economies begin to reopen.
The gradual return to global flights as restrictions were lifted has contributed to the increasing demand for oil in general, and while Omicron concerns seem a valid speed breaker, Courvalin believes air travel will continue to recover at a modest pace.
“We’ve already had record high demand before this newest variant, and you’re adding higher jet demand and the global economy is still growing,” Courvalin said in an energy outlook briefing with reporters on Friday. “You see how we will average a new record high in demand in 2022, and again, in 2023.”
While the International Benchmark Brent Crude is currently trading at $73.58 and West Texas Intermediate (WTI) at $70.93 according to data from Oilprice.com, the prices for these products have surged above $80 in recent months as post-pandemic supply lags behind the enormous demand from reopening economies. The energy crises in Europe which became aggravated a few months ago have also hiked prices for Natural Gas across the board.
Many countries felt the weight of the pandemic and the impacts of restrictions in air travel, a mistake many may not be willing to make again despite the need to curtail the spread of Omicron. Based on these, the demand for crude oil, and natural gas products are bound to soar in 2022, with an extension likely to tag into 2023.
“We’ll have to wait for this wave to pass but that suggests that international travel should recover further next year,” he said, predicting that oil prices will be at $85 per barrel for 2022, with an upside risk that prices could go $5 to $10 higher.
Goldman Sachs Oil Price Prediction, OPEC+ Ready to Make Adjustments
While many may maintain the stance that they do not know what is next for crude oil, OPEC+ is stepping up its responsiveness and is ready to meet to make any necessary adjustments to oil supply. With the organization’s members including Russia acknowledging they could meet earlier than the planned date of January 4th, the chances to add an additional 400,000 barrels supply of oil per day in January is high according to a Reuters report.
In all, Courvalin emphasized the “demand destruction” concept which makes can elongate the period of the high oil price range in the market. With this, he noted that crude oil price could soar as high as $110, a figure he said is “quite conceivable.”