According to the Winter 2023 Economic Forecast, the average price of Brent oil is projected to be $84.8 per barrel in 2023, but it is expected to decrease to $79.9 the following year.
According to the European Commission, the implementation of a price cap on offshore deliveries of Russian oil and the imposition of an embargo on it have not caused any increased stress on the global market. Furthermore, there are no concerns about the effects of similar measures being taken against Russian oil products, which went into effect on February 5th. The EC believes that there will not be any shortage of diesel fuel.
The revision of their forecast is due to the successful reduction of energy dependence on Russia, which has resulted in a drop in gas prices. The primary risk factor in this situation remains geopolitical tensions.
If the European Commission’s predictions hold true, the average cost of Urals oil, Russia’s primary export grade, will be below $60 per barrel by the end of the year, which is the price ceiling level.
On February 10, 2023, Deputy Prime Minister Alexander Novak announced that Russia will decrease its oil production by 500,000 barrels per day in March. This reduction comes in response to the recent Western sanctions on Moscow’s crude oil and oil products.
According to the International Energy Agency, Russia’s crude oil output was 9.77 million barrels per day in December, making this cut equivalent to 5% of its total production.
Alexander Novak stated that the reduction will help to stabilize market relations. He also emphasized that this cut does not affect gas condensate and will be based on actual output levels, not Russia’s quota under the OPEC+ agreement.
It is worth noting that this decision was not made in collaboration with the OPEC+ coalition, of which Moscow holds a co-chair position. While members of OPEC+ usually have to reach a consensus on output policies, the group has previously allowed voluntary actions that align with existing output agreements. This Russian decline builds upon the previous OPEC+ decision to lower production by 2 million barrels per day, which was agreed in October of last year.
Oil prices fell below $97 per barrel Monday just days after spiking above $100. Last week’s surge continued to ripple through global pipelines, however, as gasoline prices jumped 8 cents over the weekend. Crude dropped on reports that Libya was still exporting oil. Shipments were thought to have halted last week as protestors clashed with the government and strongman Moammar Gadhafi lost control of many of the country’s oil fields.
Oil prices hovered below $77 a barrel Tuesday as traders awaited corporate earnings reports for clues about the strength of the global economy and the outlook for energy demand.
By early afternoon in Europe, benchmark crude for August delivery was down 18 cents to $76.36 a barrel in electronic trading on the New York Mercantile Exchange (NYMEX). The contract rose 53 cents to settle at $76.54 on Monday.
Crude oil prices fell as fresh concerns over Europe’s economy spooked the markets and overshadowed a slew of upbeat corporate earnings. Crude for June delivery dropped $1.05 to $82.63 a barrel.
A spate of mostly upbeat earnings reports in the U.S. helped to boost oil prices, after they fell 3% last Friday on the Goldman Sachs fraud charge. But the good news were overshadowed in part by still weak demand, European economic woes, and the Icelandic volcano, which has crippled international travel and shipments.