Artificial Intelligence is likely to weigh on oil prices in the coming decade.

Artificial Intelligence is likely to weigh on oil prices in the coming decade as it boosts supply which would potentially dwindle the cost through advanced logistics, Reuters reports as Goldman Sachs said on Tuesday. Goldman Sachs is a financial institution that serves clients with financing, advisory, risk distribution, and hedging solutions. This is anticipated to raise the amount of recoverable sources pondering on the profits. The major focus is on the demand side as the impact of AI on metals and energy adheres to power demand.

It was said that this would hurt oil prices and affect producers negatively resulting in an income decrease. This will further reduce the profit of producers such as the members of the Organisation of the Petroleum Exporting Countries and OPEC+ (Alliance of crude producers).

Also, read| Saudi Arabia Turns To Kuwait For Fuel Oil To Meet Summer Demands

Goldman Sachs said, “We believe that AI would likely be a modest net negative to oil prices in the medium-to-long term as the negative impact from the cost curve (c.-$5/bbl) – oil’s long-term anchor which would likely outweigh the demand boost (c.+$2/bbl).”

The report also estimated that at least 30% of the cost of the oil-bearing shale will be cut down by AI in the coming years. AI could potentially reduce costs by rounding off logistics which could lead to a fall in the marginal incentive. This could result in a 25% gain in productivity, as per Goldman Sachs. In addition to that, there is expected to be 10-30 billion barrels if there is an increase in the AI-induced US shale.

Apart from that, US tech giants are racing to acquire energy assets from bitcoin miners to secure a dwindling electricity supply for their rapidly growing data centres as artificial intelligence and cloud computing demand surge in the current era.

Also, read| Imports Of Iranian Crude Oil In China Find New Market: Report