An increasing number of banks and investors are betting that oil prices (which have been rising for months) keep high over the next few years due to renewed demand and low global supply.
Over the past few days, prices have reached multi-year highs, with a barrel of crude Brent coming to cost $ 86.43, its highest level since October 2018, and a barrel of West Texas Intermediate (WTI) reaching the $ 84.76, its highest figure since 2014.
Many of the major investment banks, however, consider that there is still room for prices to go up even higher. This is the case of Goldman Sachs, which foresees that a barrel of Brent will cost 90 dollars by the end of the year, $ 10 more than he had previously forecast.
According said to CNBC Damien Courvalin, head of energy research at Goldman Sachs, demand will reach record levels in 2022 and 2023, leaving the world “facing potential multi-year deficits and the risk of significantly higher prices.”
For his part, Michael Tran, analyst at the investment bank RBC Capital Markets, declared in mid-October that “the oil market is in the early days of a structurally strong cycle of several years“.
Last week, the financial multinational Morgan Stanley raised its long-term oil price outlook to $ 70 a barrel, while BNP Paribas (Europe’s largest bank) expects hydrocarbon prices to be close to 80 dollars per barrel in 2023, report Bloomberg.
Furthermore, according to the Swiss Society for Financial Services UBS, prices will remain “well supported over the next year”, although demand is expected to increase during that period as well, as “additional production from OPEC + and the US should result in an oil market balanced“.
According to experts, prices are likely to remain structurally higher after 2022 as demand for crude will continue to rise and new supply will continue to struggle to meet it. This is mainly due to several years of little investment and pressure on Big Oil by governments and organizations seeking a gradual shift to renewable energy to reduce greenhouse gas emissions.
“Our analysis shows that upstream companies will need to increase their spending considerably in the medium term to fully replace reserves and avoid declines in future production.” concluded Sajjad Alam, Vice President of Moody’s Investment Service.