OPEC: Oil prices are still rising! Goldman Sachs: Soaring to 140 this summer!

On June 9, Brent crude oil briefly exceeded $124 per barrel, approaching the post-Russia-Ukraine high
.

Against the backdrop of the continued rise in oil prices, three recent related events are noteworthy:

First, OPEC has intensively stated that oil production in most member countries has reached its limit, and oil prices are "far from peaking";

Second, oil big short Citi and Barclays have raised their oil price forecasts, bull flag bearer Goldman Sachs shouted that oil will soar to $140 this summer, and Trafigura, one of the world's largest oil traders, warned that oil prices will rise to $150 per barrel or more in the coming months;

Third, under the high oil prices, India has made a lot of money by buying low-priced Russian oil for refining and then selling it to Europe, and is now seeking to purchase more oil
from Russia at a significant discount.

1.
OPEC: Oil prices are far from peaking

The United Arab Emirates, a major OPEC+ member of the Organization of Producers, said oil prices were "far from peaking" as demand from China was recovering, potentially tightening an already tight global market
.

OPEC Secretary-General Barkindo echoed this view, saying that "all but 2-3 member states have reached the upper limit
of production capacity.
" He also said that the world needs to accept this harsh truth, which is a global challenge
.

UAE Energy Minister Suhail Al-Mazrouei warned that OPEC+ cannot guarantee adequate oil supply
as demand fully recovers from the pandemic without more global investment.
If Russian oil and gas are completely withdrawn from the market, prices could reach levels far beyond expectations
.

The comments suggest that the OPEC+ alliance's decision to increase production last week did little to ease consumers who face soaring energy prices this summer
.

2.
Goldman Sachs: Oil will soar to $140 this summer

Why did crude oil prices hit new highs? Goldman Sachs pointed out in its latest report that the structural shortage of crude oil has not been resolved, and oil prices need to rise further to eventually normalize
inventories.

Damien Courvalin, head of energy research at Goldman Sachs, summarized the following four factors supporting the rise in oil prices:

1) The short-lived inventory surplus has ended due to the continued recovery in Chinese demand and production cuts in Russia;

2) Global crude oil demand remains resilient under high oil prices, with strong growth in crude oil demand and demand destruction just beginning;

3) the crude oil supply of all parties is slow to respond to the price, and it is difficult to increase the supply;

4) Structural shortages remain unresolved, and the exacerbation of long-term shortages requires a near-term surplus
.

Goldman Sachs raised its Brent crude oil target again in this report, raising its summer peak oil price target from $125 to $140, while expecting a price target of $130 in the fourth quarter, compared with the previous expectation of $125; The first half of 2023 quarter is expected to be $130, compared to $
115 previously.

Goldman Sachs noted that demand in China is recovering and is expected to grow strongly this year
.
Although the decline in Russian exports has been modest so far, Russian production is expected to decline
further after the European ban.

Goldman Sachs believes that the supply and demand situation in the global market will worsen, and the supply deficit may widen further than before, and the current global inventory is 75 million barrels
less than before.
Goldman Sachs estimates that the June 22 deficit is close to 600,000 b/d (at current spot prices), a new deficit that will keep inventories and spare capacity in global oil markets at record low levels for months ahead
.

The post-COVID reopening in the Asia-Pacific region has helped to grow crude oil demand, which could increase by 1.
7 million b/d
in 2022.

Overall, Goldman Sachs expects elastic demand growth of 2.
9 million b/d in 2022 and 2.
8 million b/d in 2023, respectively, with oil prices likely to reach $125/b
.

After exploring demand expectations, Goldman Sachs turned to supply, and in general, OPEC+ production was lower than previously forecast in the first half of 2022, with the adverse impact of supply disruptions in other countries (Libya/Iran/Venezuela) more than offsetting production growth
in core OPEC and Iraq.
However, from the second half of 2022, the adverse impact will be greater and inventories will be further reduced
.

Goldman Sachs forecasts OPEC+ Russia (and Mexico) production of 34.
1 million b/d in the second half of 2022 (up 600,000 b/d from the previous period) and 35.
1 million b/d in 2023 (up 1.
1 million b/d from the previous period), and prices will continue to rise until 2024 to rebuild the necessary buffer stocks
.

In addition, despite high oil prices, U.
S.
shale oil producers have made a lot of money instead of reproduction, but are more inclined to dividends
.

Similarly, JPMorgan CEO Jamie Dimon warned last week that oil prices could reach $150 or $175 a barrel later this year
.

3.
India has made a lot of money from changing hands

The EU embargoed Russian oil in order to cut off Russia's huge energy revenues, but unexpectedly "fattened" Indian refineries
.

Since the outbreak of the Russian-Ukrainian conflict, India has made a lot of money by buying low-priced Russian oil, refining it and selling it to Europe
.

According to media reports, Indian refiners are looking to buy more heavily discounted oil from Russia and expect imports to double
.

Russia has supplied more than 24 million barrels of oil to India in May, up from 7.
2 million barrels in April and 3 million barrels in March, according to data monitoring and analysis platform Refinitiv Eikon, while the scheduled supply in June now stands at 28 million barrels
.

Russia exported an average of 960,000 barrels of oil per month to India last year, and the current scheduled supply for June is about 25 times
the average monthly import volume of India from Russia last year.

Although India's purchase of Russian oil is not illegal and has not violated any sanctions, India has been under pressure from the Biden administration and the European Union to stop doing business
with Russia.

India argues that its imports from Russia are negligible compared to EU purchases and represent only a fraction of
India's total consumption.

Indian Foreign Minister Subrahmanyam Jaishankar said at a meeting on Friday: "Russian oil is the best (and best value for money) oil available on the market right now, and I don't think politics needs to be attached to
that.