Artificial intelligence could influence oil prices over the next decade by increasing supply through cost reductions and enhancing resource recovery, according to a report by Goldman Sachs on Tuesday.
While AI’s impact on energy has primarily focused on increasing power demand, its potential to lower oil prices could affect the income of oil-producing nations, particularly members of the Organization of the Petroleum Exporting Countries and their allies (OPEC+).
Goldman Sachs suggests that AI could cut costs by improving logistics and resource allocation, potentially leading to a $5 per barrel reduction in the marginal incentive price, assuming a 25% productivity gain observed in early AI adopters.
Although AI may slightly boost oil demand, the overall effect on prices is expected to be negative. “We believe AI will likely be a modest net negative for oil prices in the medium-to-long term,” Goldman noted, citing that the cost reduction would likely outweigh the demand increase.
Goldman Sachs estimates that AI could reduce the cost of a new shale well by up to 30%. Additionally, a 10% to 20% increase in the low recovery rates of U.S. shale, driven by AI, could expand oil reserves by 8% to 20%, equating to an additional 10-30 billion barrels.
As of the latest market data, Brent crude futures dropped by $3.51, or 4.5%, to $74.02 per barrel, the lowest since December. West Texas Intermediate futures fell by $2.97, or 4.1%, to $70.58, their lowest since January.
In related developments, U.S. tech companies are exploring energy assets held by bitcoin miners as they seek reliable power sources for their expanding AI and cloud computing operations.
