Goldman Sachs predicts that the possible presidential victory of Joe Biden could lead to a new boom in oil prices. In that regard, Biden’s arrival could improve the value of oil production and its regulation.
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While expectations for energy demand continue to decline due to the coronavirus pandemic, Goldman Sachs believes that with Biden as president, the sector will eventually benefit, especially when it comes to shale oil.
Regardless of the November elections results in the U.S., the firm remains optimistic about its forecasts.
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Goldman Sachs explanaiton
The firm explained that headwinds for U.S. oil and gas production would rise even further under the Biden administration. In that respect, regulations would increase the cost of shale oil production and reduce recoverable resources.
That scenario will have a positive effect on oil prices, the firm added. The new policy would require new infrastructure, which, along with a significant initial fiscal stimulus, would lead to higher demand for oil in the coming years.
Finally, the firm considers that despite Biden´s “centrist tone”, the candidate can actually boost oil prices. This can be propelled by making production more expensive and more regulated.
