Oil Price Forecast Goldman Sachs

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Oil Price Forecast Goldman Sachs

Oil Prices Can Stay Above $100

Goldman Sachs has forecasted that oil prices can stay above $100 for the long term. They added that the reason for high prices is the tightening in the US fuel market and geopolitical tension.

The global growth is expected to slowdown while the risk sentiment has turned weak. Normally, this means lower oil prices, but these conditions are offset by disruption in oil supply and tight fuel markets.

Oil Market Is Going Through Imbalance

Even now, the crude oil prices are above the $100 mark as the market is going through a period of imbalance. Even if the trade routes open up, the oil prices will not go down so easily.

Also, the physical fuel markets are showing signs of tightness. This suggests that prices can climb higher in the gasoline and diesel markets. At the same time, the inventory levels are constrained while the demand is higher due to the summer season in the Northern Hemisphere.

Amidst all of this, one key factor is the geopolitical risk. This adds a risk premium to the oil prices, and this will stay like that even if the shipping disruptions are sorted out.

Analysts added that rerouting delays and the high insurance costs are also key factors to consider. On top of that, tanker availability is also not that good, and it is distorting the normal functioning of the market.

All of these things combined have created a perfect environment for high energy prices. Also, the data from the US labor market and retail sales show that demand will not go down too much despite the high energy prices.

Goldman Sachs also added that the crude markets are highly vulnerable to various risk factors. And if geopolitical tension starts to rise again, we might see another major upside in the oil prices. In that case, oil prices can rise as much as $150, which will lead to a serious rise in global inflation.

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