Next President In TROUBLE – Bank WARNS

Whoever wins the Presidential election this November will have a very limited set of tools with which to boost domestic oil production next year, according to a statement issued by Golden Sachs on July 25th.

The US Strategic Petroleum Reserve tanks are low, the statement said, and short-run supply gains seem unlikely given current conditions.

Friday the 26th saw a slight rise in oil prices following the release of US economic data which beat expectations. Investors now anticipate that crude oil demand will increase as a consequence of the economic boost.

Crude futures gained in light of the report. The September West Texas Intermediate crude contract reached $78/barrel, while Brent crude traded at $82. Goldman Sachs is now projecting Brent prices to trade in the range between $75 to $90 throughout 2025, assuming that GDP growth continues and oil demand remains steady. OPEC (the Organization of Petroleum Exporting Countries) and its affiliates are expected to continue their current strategy of scaling output to balance the market.

Addressing the question of tariffs, Goldman Sachs acknowledged that there is growing uncertainty around imports in general. However, it stated its belief that the U.S. government is unlikely to impose them on oil imports.

However, should the federal government impose a 10% across-the-board tariffs on imported trade goods, the investment giant expects that oil demand will be weakened and oil prices may consequently fall by as much as $11/barrel in 2025. However, should the Federal Reserve delay interest rate cuts due to high inflation, Goldman Sachs expects a reduction in the price of oil by as much as $19/barrel. This would put Brent crude at $62/barrel in Q4 of 2025, instead of the currently expected $81.

The report cautions against supply-growth optimism in the short and medium term. While easing regulatory burdens will increase the long-term supply of petroleum in the US, the report says, the short-term supply is baked in by the current production and refining capacity.