Ernest Omoarelojie With Agency Reports
Leading international financial institution, Goldman Sachs, has predicted that global crude oil, Brent price, will hit the $80 per barrel mark this summer. The agency is anchoring its forecast on the imminence of a rise in global oil demand which is expected to recover with high mobility both in the US and Europe.
“Rising vaccination rates are leading to higher mobility in the United States and Europe, with global demand estimated up 1.5 mb/d in the last month to 96.5 mb/d,” the investment bank noted.
Goldman Sachs had, in April, restated the prediction, adding that there is need to appreciate global oil trend in the coming months as they may witness an upsurge which current supply rate will not match.
“The magnitude of the coming change in the volume of demand, a change which supply cannot match, must not be understated.”
Goldman Sachs analysts wrote in May that the case for a spike in global oil price remains intact, a development they attribute to extensive vaccine and possibility of US brokering a deal with Iran over the latter’s nuclear programmers.
“The case for higher oil prices therefore remains intact given the large vaccine-driven increase in demand in the face of inelastic supply,” apparently referring to the shortfall resulting from the sanction on Iran’s oil which accounts for supply inestacity. Though observers are unanimous that a lift in the ban on Iran’s crude oil supply could create a price slide dowards even though no one is sure how low it could be. However, Sachs is certain the return of Iran’s oil to the global stock will not have significant effect on either global demand dynamics or price particularly given that US earlier lifted some sanctions against Iran without any corresponding fall in oil price which stood at over $72 (Brent) per barrel with West Texas Intermediate tucked at $70.77 per barrel.
On its part, OPEC is pushing not just a rise in oil pice but also in production as the demand for oil will be up by nearly six million barrel per day this year. The organization’s forecast may not be unconnected with the prediction by the International Energy Agency’s “IEA, that it could making a combined 8.5 million barrel per day demand between now and next year. Worthy of note is that the predictions will not only put the price back at pre-pandemic levels but also possibly eclipsing it to reach 100.6 million barrel per day by the end of next year.
For countries mainly dependent on oil revenue like Nigeria, the development is expected to bring good tidings.