The S&P/ASX 200 Index (ASX: XJO) could be in for some durable tailwinds in the form of higher oil prices for longer.
That's according to forecasts from some of the world's leading global banks.
And, if correct, it would prove to be good news for ASX 200 energy shares like Santos Ltd (ASX: STO), Woodside Petroleum Ltd (ASX: WPL), and Oil Search Ltd (ASX: OSH).
The oil and gas producers have already enjoyed a tremendous rebound since Brent crude dropped below US$22 per barrel in late April 2020 as the world came to a virtual pandemic driven standstill.
But, at today's multi-year highs of US$85 per barrel, are the ASX 200 energy giants looking at significantly lower prices for their product in the years ahead?
Not according to energy market analysts at Goldman Sachs, Morgan Stanley and BNP Paribas.
Is this time different?
As Bloomberg reports, Goldman is forecasting crude oil prices of US $85 for 2023. BNP Paribas sees crude "at almost" US$80 in 2023. And Morgan Stanley just lifted its long-term forecast by US$10 to US$70 per barrel.
Among the reasons analysts see new supply constrained even as demand continues to grow are the increased attention global governments and investors are paying to climate change, reduced investments in oil and gas assets, and a marked change in the United States political scene. One that's gone from the decidedly pro-oil presidency under Donald Trump to the Joe Biden administration's increased attention to cutting carbon emissions.
Noting that current prices have yet to bring sufficient new supplies to market, head of commodities research at Goldman Sachs Jeff Currie said, "My advice to clients is that you want to stay long oil until you know where that equilibrium price is. We know it's above these levels because we haven't had a big uptick in capex and investment."
While oil demand is forecast to continue growing until 2030, supply growth may not keep up, according to Morgan Stanley. The bank forecasts supply growth could end by 2025, which would keep prices elevated and certainly come as good news to ASX 200 energy shares.
According to Morgan Stanley oil strategist Martijn Rats, "We are running at net-zero type capex levels, whilst at the same time demand is not following the net-zero trajectory. Demand will be above 100 million barrels a day for the rest of the 2020s, but on the supply side we're not going to produce that with current investment levels."
As for the shale oil boom that brought prices crashing back to earth after soaring above US$80 per barrel in October 2018?
In other potentially good news for ASX 200 energy shares, that may not be on the horizon this time.
"People have become very comfortable with the idea that shale will be there and we're not resource constrained. That's a question mark in my mind," said head of commodities desk strategy at BNP Paribas David Martin.
Now, not everyone agrees that oil prices will stay higher for longer.
According to Bloomberg, Citigroup says a "prolonged price above US$50 could add 7 million barrels a day of extra supply".
Its analysts, including Ed Morse, say, "Mid-term, cost indicators keep pointing to a fair-value range between US$40-$55 a barrel."
How have these ASX 200 energy shares been performing?
Over the past 12 months, the Woodside share price is up 27%, currently at $23.71 per share.
The Santos share price has done even better, up 34% over the past full year.
As for Oil Search, its shares have gained an impressive 50% in 12 months, currently at $4.38 per share.
By comparison, the ASX 200 is up 20% over that same time.
