Goldman Sachs "International Oil Price to Reach $80 per Barrel"

U.S. investment bank Goldman Sachs has warned that international oil prices could fall to the $80 range by the end of this year. It marks a significant retreat from the March forecast that predicted oil prices would exceed $100 per barrel due to additional oil demand driven by the reopening of China's economy, the world's largest oil consumer.

According to Bloomberg and other sources on the 11th (local time), Goldman Sachs projected the year-end Brent crude oil price at $86 per barrel. This is a downward revision of more than 9% from the $95 per barrel forecast presented in the March report.

This is the third time in the past six months that Goldman Sachs has lowered its international oil price forecast. Bloomberg reported, "Goldman Sachs had previously maintained a bullish outlook expecting oil prices to surpass $100 per barrel, but has been on a downward adjustment trend since last December."

Goldman Sachs cited the increase in oil supply from countries under economic sanctions such as Russia, Iran, and Venezuela, combined with recession concerns leading to decreased demand, as the key drivers behind the forecasted decline in international oil prices.

In particular, despite comprehensive sanctions from Western countries, Russia's oil production has almost fully recovered to pre-war levels.

Jeff Currie, head of commodity research at Goldman Sachs, stated in an interview with Bloomberg TV last week, "We have not seen any evidence that would change our view."

Despite the April announcement of production cuts by the Organization of the Petroleum Exporting Countries (OPEC) plus 14 member countries and 10 major oil-producing countries including Russia, concerns over demand issues have overshadowed the market, causing international oil prices to quickly lose upward momentum.

Especially, China's May inflation data showing weaker-than-expected performance has amplified concerns about demand.

Fatih Birol, Executive Director of the International Energy Agency (IEA), said, "Among the uncertainties affecting oil prices, the most important is China," adding, "As the Chinese economy weakens, bearish sentiment on international oil prices is expected to continue."

At the time of OPEC+'s surprise production cut announcement in April, the August Brent crude price surged to the mid-$80 range per barrel, but the effect of the cut did not last even a month.

As of the closing price on the 9th, the August Brent crude price rose 0.22% from the previous session to $76.11 per barrel, currently fluctuating in the mid-$70 range.

[Image source=Reuters Yonhap News]

Meanwhile, the market is paying close attention to the oil market report to be released by the IEA on the 14th. The IEA recently maintained its forecast for oil demand growth this year while anticipating somewhat tighter supply and demand conditions in the second half of the year due to OPEC+ production cuts.

If the IEA issues a similar outlook in the report on the 14th, it is expected that the short-term decline in international oil prices will not be significant.