(Reuters) – Artificial Intelligence Could Impact Oil Prices in the Next Decade, Goldman Sachs Warns
Artificial intelligence (AI) could potentially hurt oil prices over the next decade, according to a recent note from Goldman Sachs. The use of AI in the energy sector could boost supply by reducing costs through improved logistics and increasing the amount of recoverable resources.
Why It’s Important:
While most discussions about AI in the energy and metals sectors have focused on the demand side, the potential negative impact on oil prices could have significant consequences. A decrease in oil prices could affect the incomes of major producers like OPEC+.
Key Quotes:
“AI could potentially reduce costs via improved logistics and resource allocation, resulting in a $5 per barrel fall in the marginal incentive price,” Goldman Sachs stated in their note. The investment bank expects a modest AI boost to oil demand compared to the impact on power demand over the next decade.
By the Numbers:
Goldman Sachs estimates that AI could potentially reduce about 30% of the costs of a new shale well and increase oil reserves by 8% to 20% through improved recovery factors.
Context:
Oil futures were down significantly, with Brent crude hitting its lowest level since December. U.S. technology companies are also looking to secure energy assets from bitcoin miners to power their AI and cloud computing data centers.
Analysis:
Goldman Sachs’ warning about the potential negative impact of AI on oil prices highlights the changing dynamics in the energy sector. As AI technology continues to evolve and improve, it could lead to a decrease in oil prices by reducing costs and increasing supply. This could have far-reaching consequences for major oil-producing nations and companies reliant on oil revenues. Investors and consumers alike should pay attention to these developments as they could impact global energy markets and ultimately, individual finances.