According to Goldman Sachs, the oil industry will see record demand, which will cause crude prices to soar in the near future. The head of oil research at Goldman Sachs, Daan Struyven, predicts that the second half of the year will see huge deficits, with a shortfall of roughly 2 million barrels per day anticipated for the third quarter as demand approaches an all-time high. By the end of the year, it is predicted that this rise in demand would push Brent oil prices up to $86 per barrel from their present level of slightly over $80.
Struyven acknowledged that U.S. crude oil production has increased significantly over the previous year, reaching 12.7 million barrels per day, but he also pointed out that this growth rate is expected to slow down in the remaining months of 2023. Goldman Sachs anticipates that the fall in rig numbers will mostly be responsible for the sharp decline in U.S. oil production growth, which will sequentially average barely 200 barrels per day. This drop is used to predict future production and drilling activities.
Struyven also claims that the absence of a deal after the G20 energy ministers’ conference has led to “elevated demand uncertainty” in the oil market. Lack of agreement on the phase-out of fossil fuels at the last G20 summit in India complicates the shift to sustainable energy and increases the uncertainty around oil consumption.
Struyven cautioned that investors would look for a premium to make up for the increased risk brought on by this greater demand uncertainty. The world oil consumption was expected to climb by 2.4 million barrels per day in 2023, above the 2.3 million barrels per day increase predicted by the International Energy Agency for that year.
In the second half of 2023, India and China’s demand for oil are expected to increase by 2 million barrels per day, according to Joseph McMonigle, secretary-general of the International Energy Forum. Market players constantly follow these events for possible effects on crude prices and the entire energy environment as oil demand rises and global energy dynamics change.