Higher inflation this year? Goldman Sachs predicts oil prices could rise up to $110 a barrel
Easing inflation expectations this year may be at risk of a reversal as Goldman Sachs said that with China and other Asian economies fully reopening from their pandemic restrictions, a barrel of Brent oil could reach $110 by the third quarter of 2023, reported Bloomberg.
That suggests expectations for inflation to ease this year take another hit as oil above $100 per barrel points to elevated price pressures.
Watch | World Business Watch: Goldman sees $110 oil by third quarter on full China reopening
China’s full reopening may be good news for its economy and global supply chains in the doldrums. Still, with the war on the edge of Europe showing no signs of easing, oil demand from the world’s largest consumer of crude worsens the inflation outlook for the rest of the world.
Goldman Sachs predicts the price of other commodities could also rise significantly, with copper already above $9,000 a tonne this week. The Bank expects copper to top $11,500 a tonne by the end of 2023 and can touch $15,000 in the long run.
“What is the best reopening play? It is oil,” Jeff Currie, Goldman Sach’s global head of commodities research, said in a Bloomberg Television interview Wednesday. “What is idled? Planes, trains and automobiles. You turn them all back on; that’s going to be a big pop in oil demand.”
Oil prices were trading higher on Thursday, with Brent futures rising $2.57, or 3.2 per cent, to around $82.67 a barrel.
With the Russia-Ukraine war showing no signs of waning, Goldman Sach’s prediction for higher oil points to more inflation pain ahead worldwide.
Those expectations for higher commodity prices come ahead of key inflation reports in India and the US later today.
(With inputs from agencies)
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