Source: Cai Lian She Author: Liu Rui

As international oil prices rebounded this month from their lows, Goldman Sachs sounded the horn of a bull market reversal once again.

Goldman Sachs analysts said that there could be a supply shortage in the global oil market because it will take another 10 years for the oil market to reach peak demand. Meanwhile, the oil supply of major oil-producing countries around the world could continue to decrease.

It will take at least ten more years for the oil market to reach peak demand.

Goldman Sachs estimates that global oil demand will continue to rise for at least the next 10 years and that crude oil demand will reach a peak of around 110 million barrels per day in 2034.

Goldman Sachs analysts said that this is because Asia's demand for oil and oil-related products will continue to increase.

Goldman Sachs Managing Director Nikhil Bhandari and analyst Amber Cai said in a recent report:

"We believe that it will take another 10 years for the oil market to reach peak demand. More importantly, after the 10 years it takes to reach the peak, it will tend to stabilize over the next few years, rather than fall sharply."

Both the US and OPEC+ are struggling to increase production.

Goldman Sachs added that rising oil demand could lead to supply shortages, particularly if oil companies continue to cut capital spending.

"Although it will take another 10 years for the peak oil demand, the capital used for crude oil and petroleum product production is slowing down, which will restrict mid-term supply." The report said.

They mentioned that US oil companies, including ExxonMobil and Chevron, have reduced their capital expenditures by $3.8 billion this year.

At the end of the year 2023, the international oil price once again fell sharply, partially due to the surge in crude oil production in the United States and other countries. However, looking to the future, US oil production will slow down. According to the US Energy Information Administration, US domestic crude oil production this year will only increase by 2% compared to 2023.

The annual survey by the US Oil and Gas Journal shows that the total capital expenditure allocation planned by the 25 oil exploration and production companies listed in the United States in 2024 is between $61.7 billion and $65.4 billion, a decrease from the $66 billion of the previous year.

Meanwhile, other oil-producing countries are still reducing production. According to the information released at the last OPEC+ meeting, OPEC+ decided to extend its daily supply cut of 2.2 million barrels to 2025.

With the market's weighing of supply and demand prospects, oil prices have surged by a large margin in the past month. As of this Tuesday, Brent crude oil prices have risen more than 11% from their lows in June to around $85.91 per barrel.

Editor/Lambor