Artificial Intelligence to Impact Oil Prices in the Next Decade, Says Goldman Sachs
Artificial intelligence could hurt oil prices over the next decade by boosting supply and reducing costs through improved logistics, according to Goldman Sachs. This could potentially increase the amount of profitably recoverable resources, leading to a $5/bbl fall in the marginal incentive price. The impact of AI on energy and metals has mostly focused on the demand side, with expected boosts to power demand. This negative impact on oil prices could decrease incomes of producers like OPEC+.
Goldman Sachs expects a modest potential AI boost to oil demand compared to demand impact to power over the next 10 years. The firm believes that AI would likely be a modest net negative to oil prices in the medium-to-long term, as the negative impact from the cost curve would likely outweigh the demand boost.
According to Goldman Sachs' estimates, AI could potentially reduce about 30% of the costs of a new shale well and increase oil reserves by 8% to 20% through a 10% to 20% increase in low recovery factors of U.S. shale.
Oil futures were down to their lowest levels since December and January, with U.S. technology companies pursuing energy assets held by bitcoin miners to secure electricity for their AI and cloud computing data centers.
In summary, the impact of artificial intelligence on oil prices could lead to lower costs and increased supply, potentially reducing the income of oil producers. This could have a significant effect on global energy markets and the profitability of oil-related investments in the future.