The price of crude oil stayed around $80 for five years
On Monday (February 6) local time, Saudi Arabia unexpectedly raised the price of its flagship crude oil for Asian buyers on expectations of a recovery in oil demand, particularly from China. At present, the market on China’s rising oil demand to support the international oil price continues to strengthen confidence, and major institutions have shown an optimistic trend in predicting future oil prices.
Recently, Fitch Solutions Country Risk&Industry Research, a well-known international consultancy, released the latest oil price outlook report. The report expects Brent crude to average $95 a barrel in 2023, $88 a barrel in 2024 and 2025, and $85 a barrel in 2026 and 2027. In addition, Fitch, Standard Chartered Bank, and other institutions also released the future oil price forecast, according to their data, the crude oil price in five years to stay near 80 dollars.
Supply and demand forecasts vary
The International Energy Agency (IEA) released its first monthly oil report for 2023. The report points out that global oil demand is expected to reach a record high in 2023, which may push up the price of crude oil in the second half of this year.
The IEA said in its report that global oil supply will exceed demand in the first half of 2023 and will shift into a pattern of short supply in the second half of the year. IEA estimates that global oil demand is expected to increase by 1.9 million barrels per day in 2023, reaching a record 101.7 million barrels per day. The outlook of the oil market in 2023 mainly has two unknown factors: Russia’s supply and the demand brought by China’s relief measures of pandemic control, it said, adding that strong demand growth will be accompanied by a slowdown in Russian supply under the full impact of sanctions and the balance between supply and demand will be tightened.
However, EIA expects the oil supply and demand structure to remain in a reservoir pattern through 2023. On the supply side, the EIA expects the world oil supply to increase by 1.12 million BPD year-on-year to 101.1 million BPD in 2023, an increase of 40,000 BPD from its December 2022 forecast. On the demand side, the EIA expects global oil demand to increase by 1.05 million BPD year-on-year to 10.49 million BPD in 2023, an increase of 50,000 BPD from its December 2022 forecast. Despite the projected increase in global oil consumption, the state of the global economy continues to be a cause for concern and uncertainty remains in demand forecasts. As a result, EIA forecasts future oil prices more conservatively than several other agencies. “We forecast Brent crude prices to average $83 per barrel in 2023, down 18 percent from 2022, and continue to decline to $78 per barrel in 2024 as global oil inventories build, putting downward pressure on crude prices,” the EIA noted in its report.
In its monthly report, OPEC expects global oil demand to rise by 2.22 million BPD year-on-year to 101.77 million BPD in 2023, unchanged from its December 2022 forecast. OPEC believes oil demand growth will continue to be affected by uncertainty over economic activity, quarantine policies, and geopolitical events. At the OPEC+ Joint Ministerial Monitoring Committee (JMMC) in early February, OPEC+ representatives stated that the OPEC+ Committee did not recommend any adjustment to production. Delegates said OPEC+ wanted to remain conservative in its approach until there was a clearer signal that the market needed more supplies. OPEC+ decided to maintain the status quo because it wanted more time to assess Chinese consumption data and the impact of EU sanctions against Russia.