Goldman Sachs is now predicting that brent crude oil will average $140 a barrel between July and September, up from its prior forecast of $125. Brent crude is currently trading at $120 a barrel.
On top of this, Goldman Sachs analysts foresee gas stations raising prices to levels commensurate with oil at $160 a barrel, in order to curtail demand.
Gas prices in the U.S. have been increasing by several cents on a daily basis, setting new records each day. On Wednesday, June 8, the average cost of a gallon of gas has risen to $4.96
, up from $4.92 on Tuesday, according to the American Automobile Association.
"A large spike in prices remains quite possible this summer," the Goldman Sachs strategists wrote in their client note, CNN reports
. "We believe oil prices need to rally further to normalize the unsustainably low levels of global oil inventories."
Moody's Analytics Economist Mark Zandi warns that if oil reaches $150 a barrel, that would tip the U.S. into a recession — and "there is not way out."
The principle reason why gas is rising, according to the U.S. Energy Information Administration (EIA), is low inventories of gas and oil combined with below average refinery production.
EIA adds that the production of oil and gas by Russia will fall by 1.1 million barrels a day between May 2022 and year-end 2023, a bigger decrease than EIA previously forecast.
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