Analysts at investment bank Goldman Sachs are no longer predicting that the price of Brent crude oil will reach $100 per barrel in 2023. This is despite predictions of a tight oil market later this year from a number of industry examiners.
Instead, the bank expects Brent crude oil to reach $94 per barrel in the second half of this year, rising to $97 next year. The demand for oil was expected to increase later this year as China reopened its economy following a relaxation of its zero-covid policy, causing leading bodies like OPEC and the IEA to predict that demand will grow faster than supply. Instead, renewed expectations of an economic slowdown have taken precedence following Credit Suisse’s near-collapse and the collapse of two prominent American banks. In a note quoted by Bloomberg, Goldman Sachs said:
“Oil prices have plunged despite the China demand boom given banking stress, recession fears, and an exodus of investor flows. Historically, after such scarring events, positioning and prices recover only gradually, especially long-dated prices.”
With the price of WTI Crude dropping to $65 per barrel, it has become more likely that the US Administration will seek to refill the Strategic Petroleum Reserve (SPR) by buying oil from American producers like ExxonMobil, the maker of the Mobil DTE hydraulic oil. When it unveiled its plan to release huge volumes of oil in an effort to tame prices, the administration indicated it would replenish the SPR at a price of around $70 to support domestic producers while also getting good value for taxpayers.
