Brent crude oil price may hit $110 in 2022: Goldman Sachs

Brent crude oil price may hit $110 in 2022: Goldman Sachs

(This story originally appeared in on Oct 27, 2021)

Mumbai: Global financial major Goldman Sachs expects Brent crude prices to reach $110-per-barrel by next year, a 30% jump from the current levels of $85/bbl. Oil analysts at Goldman Sachs say that the global demand-supply mismatch, with the current demand almost near the pre-Covid levels, is expected to push up crude prices over the next year.

A commensurate 30% rise in petro product prices in India would mean petrol prices could be near the Rs 150-per-litre mark and diesel Rs 140/ltr. On Tuesday, the price of petrol in the city was Rs 113.4/ltr while diesel was at Rs 104.4/ltr.

“We estimate that global oil demand has surpassed 99 million barrels per day (mb/d) and will shortly hit its pre-Covid level of 100 mb/d as Asia rebounds after the Delta wave,” Goldman Sachs analysts said in a recent note. “In addition, we estimate that gas-to-oil switching may be contributing at least 1 mb/d to oil demand, with current gas forwards incentivising this through winter. While not our base-case, such persistence would pose upside risk to our $90/bbl year-end Brent price forecast.”

Analysts at Goldman Sachs said that oil price was not high enough to generate demand destruction given falling energy intensity in developed markets and rising income levels in emerging markets. “Specifically, we estimate that the 2022 Brent price would need to reach $110/bbl to balance the deficit we expect through Q1 2022 via the demand side alone.”

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