AI to dampen oil prices over next decade on improved U.S. shale production, Goldman Sachs predicts

(Bloomberg) – Artificial intelligence will ultimately help drive down oil prices over the next decade as improved U.S. shale production outweighs better oil demand, according to Goldman Sachs Group Inc.

The bank forecasts a 30% cut to shale costs thanks to AI during the period while delivering a modest boost to long-run oil demand, analysts including Callum Bruce wrote this week in a note to investors. The bottom-line impact could lower oil prices by $5 a barrel through increased supply and raise crude prices by $2 a barrel through higher demand, according to the note.

“AI proliferation merely represents a continuation of the enormous productivity improvements observed in this industry over the last few decades,” the analysts wrote. They added that it “would increase the ultimately recoverable resource base, delaying further the peak of US shale supply, and further slowing a potential drawdown of elevated OPEC+ spare capacity.”

After constricting AI to mostly back-office tasks such as evaluating seismic surveys, while keeping drilling and hydraulic fracturing firmly in human hands, U.S. operators are increasingly adopting the emerging technology to boost more mainstream work.

The goal is to cut costs and help squeeze more oil from the ground, which threatens to undermine efforts by the Organization of the Petroleum Exporting Countries to rein in global oil production and boost prices.