The US Energy Information Administration (EIA) revised up its 2022 forecast for global crude oil prices by around 27% from its previous February estimate late on Tuesday.
In the March Short-Term Energy Outlook (STEO), the EIA revised up the spot price of Brent crude by $22 per barrel to an average of $105.22 per barrel and American benchmark West Texas Intermediate (WTI) to $101.17 a barrel.
'The higher price forecast partly reflects the uncertainties about disruptions to supply and additional sanctions related to Russia's further invasion of Ukraine,' the agency said.
In 2023, the agency predicts that Brent will decline to $88.98 per barrel, while WTI will fall to $84.98 a barrel.
However, the EIA cautioned that the price forecast is 'highly uncertain,' as actual price outcomes will be dependent on the degree to which sanctions are imposed on Russia, any potential future sanctions, and the impact of independent corporate actions.
According to the statistic agency, the degree to which other oil producers respond to current oil prices, as well as the effects that macroeconomic developments might have on global oil demand will also be important for oil price formation in the coming months.
'Although we reduced Russia's oil production in our forecast, we still expect that global oil inventories will build at an average rate of 500,000 barrels per day (bpd) from the second quarter of 2022 through the end of 2023, which we expect will put downward pressure on crude oil prices,” the IEA said.
'If production disruptions—in Russia or elsewhere—are more than we forecast, resulting crude oil prices would be higher than our forecast,' it added.
- Russian crude oil exports and production to decline in coming months
The EIA estimated that Russia’s production of 11.3 million bpd of petroleum and other liquids in February will fall by 25,000 bpd in March, with an additional decline of 500,000 bpd in April.
According to the agency, production will temporarily decrease as some shippers refrain from picking up crude oil cargoes from Russia, mainly as a result of current sanctions or in anticipation of additional sanctions.
'Although Russia's crude oil production and export capacity will continue to be available, there is considerable uncertainty as to which degree countries will continue to import crude oil and petroleum products from Russia. While we recognize that the range of outcomes for Russia's oil production is wide, we assume that there will be a decrease in Russian crude oil exports, and therefore in production, in the coming months,' the IEA added.
- US crude to reach record-high production in 2023
Crude oil output in the US is forecast to average 12 million bpd in 2022, up from 11.1 million bpd in 2021.
In 2023, crude oil output in the country is expected to reach its highest annual average on record at 13 million bpd.
The previous annual-average record of 12.3 million bpd was set in 2019.
By Firdevs Yuksel