Goldman Sachs predicted this week that the price of oil could reach $100 per barrel this year – a trend that would likely increase pressure on the Biden administration to address an ongoing energy crisis.
In a note to clients, Goldman Sachs analysts said they expect Brent crude to top $100 per barrel in the third quarter of 2022. Prices could climb as high as $105 within the first three months of 2023, according to their projections.
Goldman noted a “surprisingly large deficit” in the oil market as demand remains high despite a surge in COVID-19 cases driven by the Omicron variant. Oil inventories could hit their lowest level since 2000 by this summer, the analysts warned.
Experts have noted a number of factors contributing to the spike in prices. OPEC+ nations have resisted calls to increase production to address surging demand as global economies reopen from the COVID-19 pandemic, while geopolitical tensions involving Russia and the United Arab Emirates have sparked fears of further instability in the market.
Earlier this week, the White House told Reuters that” tools continue to remain on the table” to address oil prices.
“We continue to work with producer and consumer countries and these steps have had real effects on prices and ultimately tools continue to remain on the table for us to address prices,” a spokesperson for the National Security Council said.
Oil prices hit a seven-year high earlier this week as geopolitical tensions exacerbating concerns about supply. Brent crude futures topped $87 per barrel, while West Texas Intermediate (WTI) crude futures topped $85 per barrel.
Rising prices are a key concern for the Biden administration ahead of the 2022 midterms. Inflation hit 7% in December, the highest level in four decades.
The national average price of a gallon of gas was approximately $3.32 on Wednesday, according to AAA. Costs are up significantly compared to the same day last year, when a gallon cost about $2.39.
The trend is expected to get worse throughout this year. GasBuddy previously warned that prices could hit $4 per gallon by Memorial Day.