Oil investing types.
Despite a bullish stance on the short-term future of oil demand, Goldman Sachs has a grimmer prediction for the longer-term future of the commodity: in a Bloomberg report, the investment banking major was quoted as expecting “anemic” demand for oil from the transport sector after 2025.
“Government policies driving higher efficiency gains and lower emissions have had the strongest bearing on road transport demand,” Goldman analysts said in the report. “Petrochemicals will become the new baseload for oil demand, driven by economic growth and rising consumption, especially in emerging markets.”
The transport sector is the largest consumer of crude oil, but the wider adoption of electric cars will undermine demand, according to Goldman Sachs, and it could peak by 2026. As for a return of demand to pre-pandemic levels, this will not happen at all, according to the investment bank.
In addition to rising electric vehicle sales, driven by tighter emissions regulation in Europe and the U.S., a permanent shift towards working from home for many in employment would also have a negative effect on oil demand, as 43 percent of oil consumption comes from passenger vehicles, the Bloomberg report noted.
Over the short term, however, Goldman is pretty bullish on oil. The bank said earlier this month it expected a strong rebound in oil demand over the summer, noting this would require OPEC to relax its production controls further and bring back another 2 million bpd in the third quarter. Seeing as Iran plans to boost its own production by that many barrels daily, however, the cartel may need to keep the caps, all else being equal.
As for prices, Goldman expects Brent to reach $75 per barrel in the third quarter thanks to the returning demand and to the brightening global economic outlook driven by government stimulus, notably in the United States.
Upstream oil investment.