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With all the focus on green and renewable energy, one might think that the oil and gas business is finished.

It’s possible demand will peak within the next couple of decades, but don’t forget it is supply and demand that set the price.

Every year without additional investment, the world’s oil supply falls by millions of barrels a day. Oil demand collapsed in 2020, but so did investment which will limit supply in the near-to-medium-term.

Goldman Sachs and JP Morgan are forecasting a surge in oil prices. The FT reports:

The most bullish forecast has international crude prices staging a comeback towards the $100-a-barrel region — a level not reached since 2014. The expected surge is predicated on the belief that fiscal stimulus will boost consumption just as investment in new production has been sucked out of the industry. Such a disconnect between demand and supply, fuelling a lasting surge in prices, are the basic conditions of a so-called supercycle.

It would transform conditions in the oil sector, which was hammered last year by the Covid-19 hit to demand and doom-laden predictions about what the widespread embrace of electric vehicles will mean for the market.

“We’re going to be short of oil before we don’t need it in the years to come,” JPMorgan’s head of oil and gas, Christyan Malek, told clients on a conference call last week. “We could see oil overshoot towards, or even above, $100 a barrel.”

Read more here.