BAKU, Azerbaijan, October 31. Forecast for Brent prices has been downgraded by $4.4 per barrel to $100.8 per barrel in 2022 and by $11.8 per barrel to $94 per barrel in 2023, Trend reports via the latest oil market review from the Oxford Institute for Energy Studies (OIES).
As the Institute explained,worsening global growth prospects, slower-than-expected recovery in China, and lower-than-expected disruptions in Russian companies are all key factors behind the recent price forecast changes.
“We expect Brent to remain in the low-$90s towards year end and to retreat further in the $80s in the first half of 2023 on negative demand pressures, before rebounding in the second half of the year and potentially breaking again the $100/b mark in the fourth quarter,” the report said.
Overall, geopolitical risks to price forecasting add $1.1 per barrel to the base price in 2023. Supply risks are fairly balanced in both years, while demand risks remain downward in both 2022 and 2023, at $1.1 per barrel and $7 per barrel, respectively.
According to the OIES, a deeper recession may push Brent to a $70 peak by the end of 2022, but the price of $70 per barrel is expected to remain in 2023 due to recent OPEC+ production cuts. On the other hand, oil prices are not expected to rise well above $110 per barrel during 2023.
“The balance of risks this month is further skewed on the downside with negative demand risks associated with a longer period of weakness in global growth dominating the outlook in 2023 and potentially lowering prices to $81.8 per barrel for the year as a whole. Supply-pressures combined with favorable demand conditions particularly in the second half of the year could still lift prices to $104.3 per barrel annually, but on balance downside risks prevail by -$6 per barrel. The Brent Prospect that takes into account the uncertainty underlying the outlook has now converged with our reference outlook, edging only slightly lower to $93 per barrel in 2023,” the outlook noted.
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