As international oil prices have risen back to high levels from lows this month, Goldman Sachs has once again sounded the horn of a bullish counterattack.
Goldman Sachs analysts suggest that there may be a supply shortage in the global oil market as it will take another 10 years for the oil market to reach its peak demand, while oil supply from major oil producing countries around the world may continue to decline.
It will take at least ten years for the oil market to reach its peak demand
Goldman Sachs estimates that global oil demand will continue to rise for at least the next 10 years, with crude oil demand peaking at around 110 million barrels per day by 2034.
Goldman Sachs analysts say this is due to the continued increase in demand for oil and related products in Asia.
In a recent report, Goldman Sachs Managing Director Nikhil Bhandari and analyst Amber Cai stated:
"We believe that it will take another 10 years for the oil market to reach its peak demand. More importantly, after the 10 years required to reach its peak, it will tend to stabilize in the following years rather than sharply decline."
It is difficult to increase production in both the United States and OPEC+
Goldman Sachs added that an increase in oil demand may lead to supply shortages, especially if oil companies continue to reduce capital expenditures.
The report states, "Although the peak oil demand still takes 10 years, capital used for crude oil and oil product production is slowing down, which will lead to medium-term supply constraints."
They mentioned that the capital expenditures of the six major US oil producers, including ExxonMobil and Chevron, may decrease by $3.8 billion this year.
In 2023, international oil prices experienced a significant decline at the end of the year, partly due to the surge in crude oil production in the United States and other countries. But looking ahead, US oil production will slow down. According to the US Energy Intelligence Agency's forecast, domestic crude oil production in the United States will only increase by 2% this year compared to 2023 levels.
According to an annual survey by the American Journal of Oil and Gas, 25 oil exploration and production companies listed in the United States plan a total capital expenditure allocation of $61.7 billion to $65.4 billion in 2024, a decrease from the previous year's $66 billion.
Meanwhile, other oil producing countries are continuing to reduce production. According to the news released at OPEC+'s last meeting, OPEC+has decided to extend its daily supply reduction of 2.2 million barrels until 2025.
With the market weighing the supply and demand prospects, oil prices have risen significantly in the past month. This Tuesday, Brent crude oil prices have surged by over 11% from their low point in early June, reaching around $85.91 per barrel as of the press release.