Goldman Sachs has predicted a continuous increase in global oil demand. This seems to consider the slowdown in demand for electric vehicles and the possibility of extending production cuts by major oil-producing countries.
The firm adjusted its long-term global oil demand forecast upwards, predicting continuous growth until 2034. After 2034, oil consumption is expected to stagnate.
Goldman Sachs believes the maximum oil demand is still a decade away. They predict global oil demand will reach 188.5 million barrels by 2030, an increase from the previous estimate of 160 million barrels. They also forecast it would peak in 2034 and then fluctuate until 2040.
Goldman Sachs stated, “Our outlook is more optimistic than the IEA (International Energy Agency), which evaluated that oil demand will peak before 2030.”
In particular, Goldman Sachs predicted that oil demand could increase to approximately 113mb/d by 2040 as the electric vehicle market faces headwinds.
Goldman Sachs highlighted concerns that the reduction of subsidies for electric vehicles across various European markets, coupled with ongoing price competition, is placing significant pressure on the profits of original equipment manufacturers (OEMs). This, in turn, is decelerating investments in new electric vehicles. The firm noted that the likelihood of a slowdown in the rollout of electric vehicles is increasing, with expectations for a faltering growth rate in electric vehicle sales this year becoming more pronounced.
Also, Goldman Sachs diagnosed that capital expenditure on crude oil production is slowing down, causing mid-term supply constraints across the oil value chain.
International oil prices are already showing an upward trend. The closing price of Brent crude oil futures for July delivery on the ICE futures exchange was $84.22 per barrel, up $1.12 (1.4%) from the previous day. The closing price of West Texas Intermediate (WTI) crude oil futures for July delivery on the New York Mercantile Exchange was $79.83 per barrel, up $2.11 (2.7%) from the closing price on the 24th, the day before Memorial Day.
This reflects the possibility of extended production cuts by major oil-producing countries. As the Organization of Petroleum Exporting Countries (OPEC) and the non-OPEC major oil-producing countries’ consultative body, OPEC Plus, are set to hold a meeting on the 2nd, market participants are focusing on extending the current voluntary production cut of 2.2 million barrels per day.
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