Global crude oil benchmark Brent could dip to as low as $97 a barrel by next year, from Tuesday's trade of above $100, though the dynamics around Russia's sanctioned supply makes that outlook uncertain, the US Energy Administration (EIA) said
WASHINGTON (Pakistan Point News / Sputnik - 10th May, 2022) Global crude oil benchmark Brent could dip to as low as $97 a barrel by next year, from Tuesday's trade of above $100, though the dynamics around Russia's sanctioned supply makes that outlook uncertain, the US Energy Administration (EIA) said.
"We expect the Brent price will average $107/b in 2Q22 and $103/b in the second half of 2022. We expect the average price to fall to $97/b in 2023," the EIA said in its Short-Term Energy Outlook. "However, this price forecast is highly uncertain. Actual price outcomes will largely depend 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 noted that its outlook, made on May 5, did not include the proposed ban by European Union nations on oil imports from Russia.
"However, the bans being reported at the time of writing would likely contribute to tighter oil balances and higher oil prices than our current forecast," the EIA said. "In addition, the degree to which other oil producers respond to current oil prices and the effects macroeconomic developments might have on global oil demand will be important for oil price formation in the coming months."
The EIA also said it had reduced Russia's oil production in this May forecast compared with April, and, as a result, it expected oil markets to be mostly balanced from 2Q22 through the end of 2023.
But the uncertainty over Russian supply meant that crude prices could see inordinate swings, the EIA warned. Prior to the sanctions, Russia produced as many as 11 million barrels of crude a day. But as of May, some 3 million barrels from that have been disrupted by the measures adopted by the West against Moscow, the agency said.
"Because oil inventories are currently low, we expect downward oil price pressures will be limited and market conditions will exist for significant price volatility," it added.
Brent hit 14-year highs of almost $140 a barrel on March 7 as Western nations targeted Russian energy exports with a host of sanctions in relation to the crisis in Ukraine.
But crude prices have also experienced severe volatility over the past two months. While Russian supply disruptions have kept a barrel above $100, concerns over new coronavirus lockdowns in top oil consumer China and fears that the US economy might be tipped into recession by aggressive rate hikes have also pushed crude to beneath the triple-digit mark in recent weeks.
In Tuesday's trade, Brent hit a two-week low of $102.16. West Texas Intermediate crude, the benchmark for US crude, meanwhile, struck a two-week low of $99.25.
