According to The US Energy Information Administration (EIA), The forecast for the global crude oil price is dramatically raised from the 2022 forecast by around 27%.
The EIA regulated the spot price of Brent crude by $22 per barrel to an average of $105.22 per barrel, together with the American benchmark West Texas Intermediate (WTI) at $101.17 a barrel. Moreover, The higher price of Brent crude forecast was partly related to uncertainties that resulted from the invasion of Russia in Ukraine. Until 2023, the EIA predicts that Brent will decline to $88.98 per barrel, while WTI will fall to $84.98 a barrel.
Nonetheless, the EIA cautioned that the price forecast is “highly uncertain,” due to the protracted uncertainties-impact of the Russia and Ukraine situations. Not only will the other oil producers respond to current oil prices, but also the macroeconomic development impact which will be affected by the oil price as well.
“Although we reduced Russia’s oil production in our forecast, we still expect that global oil inventories will build at an average rate of 500,000 barrels per day (bpd) from the second quarter of 2022 through the end of 2023, which we expect will put downward pressure on crude oil prices,” the IEA said.
“If production disruptions—in Russia or elsewhere—are more than we forecast, the resulting crude oil prices would be higher than we forecast,” it added.
Exporting and production of Russian crude oil tend to decline within upcoming months. The EIA anticipated that Russia’s production of 11.3 million barrels per day (bpd) of petroleum and other liquids in February will be decreased by 25,000 bpd in March. Moreover, there is going to be a decrease of 500,000 barrels per day (bpd) in April.
Furthermore, as the EIA previously warned, some shippers are delaying picking up crude oil cargoes from Russia due to the high level of uncertainty and the possibility of additional sanctions.
“Although Russia’s crude oil production and export capacity will continue to be available, there is considerable uncertainty as to whether countries will continue to import crude oil and petroleum products from Russia. While we recognize that the range of outcomes for Russia’s oil production is wide, we assume that there will be a decrease in Russian crude oil exports, and therefore in production, in the coming months,” the IEA added.
US crude is to reach record-high production in 2023
Crude oil output in the US is forecast to average 12 million barrels per day (bpd) in 2022, up from 11.1 million bpd in 2021.
In 2023, crude oil output in the US is estimated to reach its highest annual average on record at 13 million barrels per day (bpd). And the previous annual-average record in 2019 of 12.3 million barrels per day (bpd) was set.
Published 18/03/2022
By Ashley Jones
