US-based investment bank Goldman Sachs predicted that oil prices would rise due to revived Chinese demand and supply shortages in Russian oil, as well as the need to rebuild global crude oil stocks.
Analysts Damien Courvalin and Jeffrey Currie were among them, in a note dated June 6, “Brent crude oil needs to average $135 per barrel within 12 months from July for global stocks to return to normal by the end of 2023.” That number was $10 more than the bank’s previous estimate.
While the price of oil per barrel has been around $120 since the beginning of this week, the increase since the beginning of this year has been more than 50 percent.
WHY ARE PRICES INCREASING?
There are several reasons for the increase in oil prices. The increase in demand after the end of the pandemic restrictions and the sanctions imposed on Russia due to the Ukraine war were effective in the increase in prices.
According to the Goldman Sachs report, while commodities continued to recover, the slowdown in global growth and the increase in production by OPEC members, including Saudi Arabia and Iran, did not relieve the market.
“Negative global growth stimulus is insufficient to rebalance stocks at current prices,” Goldman analysts said. For this reason, prices need to increase even more to normalize the very low levels of their stocks,” he said.
The bank stated that global stocks are 75 million barrels lower than previously expected and the global deficit will average 400,000 barrels per day in the third quarter. According to the report, although the loss in Russia’s production was smaller than expected, the recovery in China’s demand caused a deficit, which put the market in trouble.
IT IS REFLECTED IN FUEL PRICES
The increase in the prices of petroleum products is also reflected in fuel oil. The increase in fuel prices, on the other hand, puts global markets struggling with inflation in a difficult situation. The increase in costs in the logistics department, which is currently in a difficult situation as a result of the increase in fuel oil, also puts upward pressure on consumer prices.
Oil prices are an important factor in directly determining fuel prices in Turkey. Since finished oil works are refined from crude oil, if the price of crude oil increases, the prices of all finished works also increase.