Goldman Sachs analysts expect global prices for crude to soar to $140 per barrel as soon as this summer, as a decline in Russian production, along with a gradual recovery in China’s demand, is expected to add to pressure on what are already low supplies.
“A large spike in prices remains quite possible this summer, when demand seasonally reaches its peak,” the bank’s analysts wrote in the note, seen by The Insider.
Goldman’s analysts expect prices to grow “given the current record low levels of inventories,” saying that Brent would average around $140 per barrel in the third quarter of 2022, and may go even higher.
The economists, however, highlighted that consumers will feel as though oil has hit $160 a barrel. This is due to a lack of capacity at refineries, which is expected to send prices for gasoline and fuel soaring more than previously thought, adding to costs across the economy.
Oil prices have skyrocketed nearly 50% so far this year as a result of a post-pandemic surge in demand for energy, and unprecedented Western sanctions imposed on Russia, one of the world’s biggest exporters.
According to data from the non-profit American Automobile Association (AAA), which tracks prices at more than 60,000 gas stations across the US, gasoline prices in the country have been pushed to a record high of $4.92 a gallon.
On Friday, international benchmark Brent crude was trading above $122 a barrel, while US crude benchmark WTI was over $121 a barrel.
Goldman analysts predict prices for crude will stay high, even though a surge to around $140 would trigger some “demand destruction” by encouraging people to stop using as much energy.
For more stories on economy & finance visit RT's business section