US, WASHINGTON (ORDO NEWS) — Goldman Sachs analysts said on Monday that the Coruna epidemic and the consequent drop in oil prices will lead to a stronger and smaller oil sector.
Crude prices suffered a further big drop on Monday as the epidemic worsened, with no end to the looming price war between Saudi Arabia and Russia.
Meanwhile, refiners around the world have been forced to halt operations due to a sharp drop in demand, prompting dealers and analysts to speed up expectations.
Goldman said in a note, “If pipelines are blocked due to the closure of refineries and no stockpiles are established and reserves shrinking, this will lead to a very rapid shift in risk towards an oil shortage.”
He added that this, in turn, could lead to an oil deficit, to push prices above the target price in the bank’s expectations of $ 55 a barrel for 2021.
“This is likely to change the rules of the game in the industry,” the bank wrote.
“The major oil companies will collect the best assets in the industry and abandon the worst … When the downturn ends, there will be fewer companies, but capital restrictions will remain,” he added.
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