Goldman Sachs expects falling oil prices due to AI application

Goldman Sachs has published a forecast indicating that Artificial Intelligence (AI) could lower oil prices in the next ten years through cost reductions and an increase in recoverable resources, which in turn could boost supply. The bank emphasizes that AI's impact on the energy and metal sectors has so far been primarily on the demand side, with an increase in electricity demand expected. However, a negative effect on oil prices could impact the income of producers, including OPEC+ members. Goldman Sachs anticipates only a moderate increase in oil demand due to AI in the next ten years—particularly in comparison to the larger impact AI will have on demand for electricity and natural gas. AI could reduce the costs of new shale oil drilling by approximately 30 percent. Additionally, AI-driven improvements in shale oil recovery rates in the U.S. could increase the oil reserve potential by 8 to 20 percent, corresponding to an additional 10 to 30 billion barrels. Even though Brent crude oil prices have recently come under significant pressure and were quoted at USD 77.21 per barrel on Tuesday, the overall market sentiment remains pessimistic. A slight recovery from previous lows cannot mask the fundamental downward trend. Current data from OPEC indicate that 8 OPEC+ members plan to increase their production by 180,000 barrels per day. This anticipated supply boost adds further pressure to the oil market, especially against the backdrop of weakening demand indicators from major economies.