Where Is the Oil Price Heading in 2022 and 2023? (2024)

byAndreas Exarheas

According to the September STEO, the EIA sees the Brent spot price averaging $104.21 per barrel in 2022 and $96.91 per barrel in 2023. Broken down quarterly, the STEO forecasts that the commodity will average $103.89 per barrel in the third quarter of this year and $97.98 per barrel in the fourth quarter of 2022.

In its previous STEO, which was released in August, the EIA projected that the Brent spot price would average $104.78 per barrel in 2022 and $95.13 per barrel in 2023. The EIA’s August STEO forecasted that the Brent spot average price would come in at $105.82 per barrel in the third quarter of 2022 and $98.30 per barrel in the fourth quarter of 2022.

“The monthly average Brent front-month futures price was $98 per barrel in August, about $7 per barrel lower than in July,” the EIA stated in its latest STEO, adding that the lower prices in August “likely reflected overall increases in global petroleum inventories”.

“We estimate that crude oil prices will generally remain near August average levels through the end of 2023. Although we expect average crude oil prices to mostly remain between $90 per barrel - $100 per barrel through next year, the possibility for significant volatility around those averages is high,” the EIA added in the STEO.

In its latest STEO, the EIA highlighted several recent events “contributing to increased uncertainty in the crude oil market and in our forecast”. These included the impact of the recent OPEC decision to reduce crude oil production by 0.1 million barrels per day in October and whether there will be further production cuts in the future, the threat of increasing conflict following the outbreak of violent clashes in the Libyan capital of Tripoli, and uncertainty around the potential expiration of the current coordinated petroleum release from strategic reserves in November.

The potential return to an Iran nuclear deal that could lift sanctions on the country and allow Iran’s crude oil exports into the market and the risk of hurricanes that could result in potential production outages and limited export traffic along the U.S. Gulf Coast were also flagged as recent events contributing to increased uncertainty in the sector and the EIA’s forecast.

At the time of writing, the price of Brent crude oil is trading at $88.18 per barrel. The lowest the commodity has traded this year, so far, was $78.98 per barrel on January 3, while the highest, so far, was $127.98 per barrel on March 8.

Oil soared past $100 per barrel for the first time in years in February as Russian forces escalated a conflict with Ukraine. The commodity closed at $88 per barrel on September 7 after closing at $105.09 per barrel near the end of August.

To contact the author, emailandreas.exarheas@rigzone.com