Goldman Sachs and Saudi Arabia Warn of Major Oil Price Surge
While speaking at a conference in Saudi Arabia on Sunday Goldman Sachs chief commodity analyst, Jeffery Currie, spoke about the effects of western sanctions on Russian petroleum production and the lack of investment in the industry. The analyst was quoted as saying, "Right now, we're still balanced to a surplus because China has still yet to fully rebound. Are we going to run out of spare production capacity? Potentially by 2024, you start to have a serious problem." Currie's concerns focus on a major increase in global petroleum prices due to the combination of OPEC+ countries, like Russia and Saudi Arabia, cutting their production at the same time China rebounds from their dip in natural gas demand caused by COVID. However, he believes that petroleum-producing countries will have to tap into their spare production capacity as global demand increases. That's where the concern over under-investment comes into play. Petroleum-producing countries could quickly run out of spare production capacity as global demand rises, this would create a deficit of supply rather than demand which could lead to skyrocketing energy prices in the global market.