American bank Goldman Sachs
GOLDMAN SACHS
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Estimates that oil prices will jump to $110 per barrel in 2023 due to fears of a recession, the geopolitical tensions between the countries and the continuation of the ‘zero corona’ policy that puts China into repeated shutdowns. But these estimates should be taken with a limited guarantee. They indicate a trend, but don’t stick to the numbers. Only Goldman Sachs expected the price to be $125 per barrel.
By the way, it’s not just analysts in the world who change their estimates. Bank Leumi here in Israel also predicted at the end of August that the price of oil “will remain around $100 per barrel for the foreseeable future”, then they said that its price “depends to a large extent on the signing of a nuclear agreement between the powers and Iran”. Exactly one month ago, at the end of October, they predicted that the price of oil “will be around 100 dollars per barrel at the end of 2022” and repeated this in the forecast three weeks ago, while this week they lowered the expectation to 90 at the end of the year.
In any case, Jeff Currie, head of commodities at Goldman Sachs, says that a combination of factors led the bank to downgrade its oil price forecasts in recent months. The reasons are not new, but the bank mentions them again: due to the weakening of demand for crude oil in China (WTI) due to the zero-corona policy of the Chinese government, this is in addition to the boycott of Russian oil following the war in Ukraine.
Carey says: “I think the key point with China right now is the risk that you will get a forced ‘re-closure’. Meaning that there will be a self-lockdown where people don’t want to get on trains, don’t want to get to work and demand is going to drop further.”
However, Carey claims that the main macro factor that affects the demand for oil is precisely inflation and the strengthening of the dollar: “First and foremost it is the dollar. What is the definition of inflation? Too much money chasing too few goods.” Carey emphasizes that the mid-term oil forecast for 2023 was “very positive” and the bank plans to continue with a forecast of $110 per barrel for Brent crude next year.
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The Ofek+ cartel of oil countries (which includes Russia) will meet in Vienna, Austria on December 4, to decide whether to reduce or increase production – or as they will tell you to ‘adjust oil output in accordance with further weakness in demand in China’ – and actually influence prices.
In any case, oil prices jump by 2% today. A barrel of WTI crude oil is currently trading at $79, while a barrel of Brent is trading at $85.
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