Oil forecast scaring Goldman Sachs: Prices will rise even more

US bank Goldman Sachs stated that for the oil market to stabilize, Brent crude oil should be priced at an average of $135 per barrel within 12 months.

U.S.-based investment bank Goldman Sachs predicted oil prices would rise due to revived Chinese demand and supply problems in Russian oil, as well as the need to rebuild global crude oil stocks.

Analysts including Damien Courvalin and Jeffrey Currie said in a June 6 note that “Brent crude oil needs to average $135 per barrel within 12 months from July for global stocks to return to normal by the end of 2023.” This figure was $10 more than the bank’s previous estimate.

The price of oil per barrel has been trading at around $120 since the beginning of this week, while the increase since the beginning of this year has been more than 50 percent.

There are several reasons for the increase in oil prices. The increase in demand after the end of the pandemic restrictions and the sanctions imposed on Russia due to the Ukraine war were effective in the increase in prices.

According to the Goldman Sachs report, while commodities continue to recover, the slowdown in global growth and the increase in production by OPEC members, including Saudi Arabia and Iran, did not relieve the market.

“Negative global growth stimulus is insufficient to rebalance stocks at current prices,” Goldman analysts said. “Therefore, prices need to rise further to normalize the extremely low levels of inventories.”

The bank said global inventories were 75 million barrels lower than previously expected, with the global deficit expected to average 400,000 barrels per day in the third quarter. According to the report, although the loss in Russia’s production was smaller than expected, the recovery in China’s demand caused a deficit, which put the market in trouble.

The increase in the prices of petroleum products is also reflected in fuel oil. The increase in fuel prices, on the other hand, puts global markets struggling with inflation in a difficult position. The increase in costs in the logistics sector, which is currently in a difficult situation as a result of the rise in fuel oil, is also pushing consumer prices upwards.

Oil prices are an important factor in directly determining fuel prices in Turkey. Since finished petroleum products are refined from crude oil, if the price of crude oil increases, the prices of all finished products also increase.