Global oil projected at below $100 in 2023 despite Russia squeeze

WASHINGTON-The global price of oil is expected to average below $100 per barrel next year despite a squeeze in Russian production from Western sanctions applied against Moscow over the Ukraine conflict, the US Energy Information Administration (EIA) said Tuesday.

"We forecast the Brent crude oil price will rise from an average of $94/b in 1H23 to an average of $98/b in 4Q23, averaging $95/b for all of 2023," the EIA said in its Short-Term Energy Outlook (STEO), which it publishes monthly.

Brent hit 14-year highs of almost $140 per barrel in March right after the outbreak of fighting in Ukraine, which upended global commodities supply in the second quarter.

From June onwards, emergency oil reserves released by the United States, combined with recession fears over inflation at 40-year highs and continued COVID-19 lockdowns in China, pushed Brent to a 2022 low of beneath $83.

The global oil price has rebounded since, hovering at under $97 in Tuesday's trade.But the EIA's STEO projections suggested that recession fears will keep Brent capped at under $100 through next year despite the push by oil bulls to bring the crude benchmark back to triple-digit pricing.

In the STEO report, the EIA acknowledged that global oil consumption could outpace production next year, and contribute to higher prices in the second half of 2023 versus the first.

"Higher-than-forecast oil prices could stem from supply disruptions resulting from the EU's impending bans on the seaborne import of crude oil and petroleum products from Russia," the agency said, referring to the plan by the Group of Seven nations to put a cap on the selling price of Russian oil.

Despite this, weakening global economic conditions could limit oil demand growth and create the potential for crude prices to trade lower than its forecast, the EIA added.(Agencies)

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