BAKU, Azerbaijan, Dec.8
By Leman Zeynalova - Trend:
Oil prices are expected to strengthen again in 2023, Trend reports with reference to the Oxford Institute of Energy Studies (OIES).
“Our reference forecast for Brent is downgraded to $70.8/b from $71.6/b in 2021 and $76.6/b from $80.9/b in 2022 but remains relatively unchanged at $77.1/b in 2023. Following the $13/b price plunge in daily Brent end-November on the emergence of the Omicron variant, we have revised lower Q4 2021 price by $3.4/b to $81/b from $84.4/b previously. Lower than expected gas-to-oil switching and the market’s shift to surpluses in 2022 keep prices in the mid $70s range and account for the $4.3/b downward revision in 2022 this month. Prices are expected to strengthen again in 2023, supported mainly by supply factors,” reads the OIES report.
The Institute notes that demand side risks build on the downside near term around our reference forecast, mainly driven by Omicron concerns over its impact on global oil demand and in particular jet fuel.
“Supply risks shift the balance to the upside again ending 2022, driven by the inability of some OPEC+ producers to meet their targets, US shale sticking to capital discipline and Iran failing to ramp up production if a nuclear deal is not reached. Our analysis of balance of risks indicates that prices remain confined in the $70/b and $90/b range over our forecast horizon despite renewed market uncertainty. The market deficit in 2021 in our reference scenario stands at -0.8 mb/d, followed by a 1.4 mb/d and 1.2 mb/d surplus in 2022 and 2023. Despite new demand concerns however, a more balanced market remains plausible in 2022 in some of the other scenarios we consider,” the report says.
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