Crude oil could soon tip into a shortfall that will make next year difficult, Goldman Sachs said, as available production capacity dwindles and underinvestment threatens future supply.
Speaking on the sidelines of an event in Saudi Arabia, Goldman’s senior commodities analyst Jeffrey Currie said, quoted by Bloomberg, that the industry is not spending enough to secure future production and that unused capacity globally is decreasing.
This could tip the oil market into a serious supply problem next year, but the price of a barrel of Brent could rise above $100 by then.
According to Currie, growing demand from China and sanctions on Russian oil will contribute to the deficit, which is expected to show up in the second quarter of this year. In response, producers will tap into their spare capacity, leaving it lower than it was before. Eventually, this will lead to a serious imbalance between supply and demand.
“Right now we’re still balanced in surplus because China hasn’t fully rebounded yet,” Currie told Bloomberg. “Are we going to run out of unused production capacity? Potentially by 2024 you start having a serious problem.
Saudi Arabia’s energy minister echoed concern over insufficient spending on future oil production. In fact, Abdulaziz bin Salman has been warning about this for over a year, and he did it again this weekend.
“All these so-called sanctions, embargoes, lack of investment, are going to turn into one and only thing, a lack of energy supplies of all kinds when they are needed most,” he said. .
So far, Brent crude has traded between $75 and $80 a barrel for most of the year, but Goldman, along with other investment banks, believes it still has a long way to go. TO DO. According to Currie, the oil market will swing into a deficit by May.
By Irina Slav for Oilprice.com
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