Goldman has come out with a research note stating that there could be a 'super-spike' in the price of oil. They are projecting that oil will jump in price to $200 a barrel within the next two years. This would be almost a 65% increase in the current price of approximately $120 a barrel.
The note says 'We believe the current energy crisis may be coming to a head, as a lack of adequate supply growth is becoming apparent.' 'The possibility of $150-$200 per barrel seems increasingly likely over the next 6-24 months, though predicting the ultimate peak in oil prices as well as the remaining duration of the upcycle remains a major uncertainty.'
Source: wsj.com
The report argues that due to the lack of adequate supply growth by oil companies and increased demand by non-OECD countries will lead to a continued increase in the price of oil. The report goes onto predicate that the price increases will lead to a reduction in demand for oil which will cause a strong correction. Goldman's research note states that the drivers for the increase are firmly in place; low OPEC spare production capacity, poor growth in non-OPEC oil production, restrictions on foreign investment in oil production and strong demand from the developing world.
Two years ago, Goldman was on of the first companies to indicate that oil prices could hit the $100 a barrel price range. Could they be right, again?
Below is a shot from a nice interactive feature from Portfolio magazine.
Source:
'"Super-spike" could lift oil to $200: Goldman', by Santosh Menon, Reuters News
'The World Oil Economy' , Portfolio.com
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