The U.S. Energy Information Administration (EIA) said in its latest short-term outlook report that it expects the Brent price ot average $117/b in March, $116/b in 2Q22, and $102/b in the second half of 2022 (2H22) and fall to $89/b in 2023, but the price forecast was “highly uncertain” due to the situation in Ukraine and Russia.
“Actual price outcomes will be dependent on the degree to which existing sanctions imposed on Russia, any potential future sanctions, and independent corporate actions affect Russia’s oil production or the sale of Russia’s oil in the global market,” the EIA said.
In addition, the degree to which other oil producers respond to current oil prices, as well as the effects macroeconomic developments might have on global oil demand, will be important for oil price formation in the coming months, it added.
“Although we reduced Russia’s oil production in our forecast, we still expect that global oil inventories will build at an average rate of 0.5 million b/d from 2Q22 through the end of 2023, which we expect will put downward pressure on crude oil prices. However, if production disruptions—in Russia or elsewhere—are more than we forecast, resulting crude oil prices would be higher than our forecast,” the EIA said.
It forecast that global consumption of petroleum and liquid fuels to average 100.6 million b/d for all of 2022, up 3.1 million b/d from 2021.
“We forecast that consumption will increase by 1.9 million b/d in 2023 to average 102.6 million b/d. Economic forecasts in this outlook were completed before Russia’s further invasion of Ukraine. The outlook for economic growth and oil consumption in Russia and surrounding countries is highly uncertain. Oil consumption will depend on how economic activity and travel respond to recent and any potential future events and sanctions,” the EIA report said.