Oil prices are likely to spike to $115 a barrel in the coming weeks and other major commodities like wheat, palladium and European natural gas will rise sharply in the aftermath of Russia’s invasion of Ukraine, Goldman Sachs said Sunday evening.
The Goldman Sachs call specifically cited new sanctions levied by the West on Russia in recent days aimed at punishing Moscow for the war.
“The hurdles that these sanctions will create for financial payments are likely to exacerbate the recent Russian commodity supply shock, already visible as Western and Chinese traders halting shipments,” Goldman Sachs economists wrote. “Barring a breakthrough in peace negotiations, we believe this leaves commodity prices having to rally sharply as we see demand destruction now the only significant remaining balancing mechanism.”
Goldman Sachs is now raising its one-month Brent price forecast to $115 a barrel, compared with $95 previously. Brent crude, the world benchmark, spiked to nearly $106 a barrel last week before cooling off a bit. In recent trading on Monday, Brent was up 2.7% to $100.59 a barrel.