Goldman Sachs Forecasts Surge in Energy Capex Amid Geopolitical Tensions

Goldman Sachs is signaling a major pivot in energy industry spending, forecasting that capital expenditure (Capex) in hydrocarbons is set to reach levels not seen since the initial shale revolution. This projection suggests a reversal of the cautious spending patterns that have dominated the sector in recent years. Michele Della Vigna, head of EMEA natural resources research at the firm, suggests that the industry has suffered from a prolonged period of underinvestment in hydrocarbons. This trend is now reversing as structural and geopolitical pressures mount, forcing a strategic reallocation of capital to ensure supply security. A primary driver for this shift is the belief that US shale production has reached its peak, limiting the ability of the US to act as a flexible swing producer. Simultaneously, escalating tensions between the US and Iran have significantly increased the risk profile of the Strait of Hormuz, a critical chokepoint for global oil transit. According to Della Vigna, these combined factors have established a new equilibrium for oil prices. The anticipated surge in investment indicates that energy firms are now prioritizing long-term capacity expansion to hedge against geopolitical instability and the natural decline of shale productivity.