Higher oil prices may reduce demand and soften supply shocks
Goldman Sachs commodity analysts believe that demand destruction resulting from higher prices will somewhat soften the blow from physically tighter oil markets.
The investment bank’s analysts estimate that the extent of demand destruction may have been more significant than expected, with actual end-use oil demand potentially falling more in response to higher prices.
The team notes that there are significant upside price risks from potentially more persistent Mideast supply losses, but also meaningful price downside from weaker demand.