Goldman Sachs on Tuesday said it expected Brent crude prices to fall to $68 per barrel by late 2025 if China oil demand remains flat through end of next year.
Brent futures were trading around $77 a barrel by 11:46 a.m. EDT (1546 GMT) on Tuesday, while U.S. West Texas Intermediate (WTI) crude was around $74.16.
“Soft China oil demand and downside risks to China GDP growth strengthen our view that the risks to our $75-90 Brent range in 2025 skew to the downside,” analysts at Goldman Sachs said in a note.
Data on Thursday showed China’s economy lost momentum in July with new home prices falling at the fastest pace in nine years, industrial output slowing, and unemployment rising.
Chinese refineries sharply cut crude processing rates last month in response to weak fuel demand.
“We conclude that the road fuel shift from oil to power (via electric vehicles) and liquefied natural gas (LNG) explains the bulk of slowdown in China demand growth,” Goldman said.
Goldman estimates a sharp slowdown in China oil demand year-over-year growth to 0.2 million barrels per day in the first half of 2024 and a year-over-year decline this summer.
Last week, the Organization of the Petroleum Exporting Countries cut its oil demand growth forecast for this year and 2025, citing softness in China.
(Reporting by Rahul Paswan and Brijesh Patel in Bengaluru; Editing by Tomasz Janowski)