Economist Smirnov predicted an increase in oil prices in 2023 to $100 per barrel
Prices and demand for oil in 2023 will continue to grow, predicted a doctor of economic sciences, professor, acting. Head of the Department of World Economy and International Economic Relations of the State University of Management Evgeny Smirnov. Also, in his opinion, the world economy will experience new “supply shocks”. The specialist shared his forecast on how the commodity market will develop next year with Lenta.ru.
Rising prices and demand
During 2022, world oil prices had a steady upward trend, Smirnov said. This process cannot be called fast, since the whole world was in the illusion of expecting a decrease in demand as economic growth slowed down, the specialist added. He noted that the outpacing rise in prices over changes in consumption and supply of oil on the world market led to a surge in speculative transactions, which shook the market even more.
“A significant part of the inflation seen recently is caused by rising commodity prices. The countries are well aware that in order to counter the jump in world oil prices, the most important factor is the growth of supplies and even the announcement of future supplies, which is also important for damping inflationary expectations,” Smirnov predicted.
Today, there is almost no reason to believe that the upward trend in oil prices will reverse in the near future, and world oil prices will continue to rise next year.
This growth will be insignificant, the specialist added to his answer, up to $100 per barrel. This will not be enough to “scare off” demand, the expert believes.
Although global demand for oil is expected to slow down, it will be offset by a growing shortage in other markets for energy commodities: gas and coal. “In particular, there will be less and less opportunities for substitution between different types of energy raw materials, since the gas and coal markets are also experiencing a shortage, and the demand for oil will continue to grow in 2023,” Smirnov said.
This trend is almost there, the energy expert pointed out. Referring to OPEC data, he pointed out that in the third quarter of 2022, compared to the first quarter, global oil consumption remained almost unchanged and, according to the organization’s forecasts, will grow slowly in the coming year.
In addition, the global economy will continue to experience supply shocks in 2023. In addition to the reduction in Russian supply, there is a shortage of reserve production capacity in the world that could be quickly brought into operation. The ability of the US strategic oil reserves to support the proposal is already almost exhausted. Even an increase in US production, according to OPEC, will not be able to compensate for the gap that has developed in the world between supply and demand
Further development scenario
In the future, price dynamics will largely depend on the scale and duration of anti-Russian sanctions, Smirnov said. “The shortage of oil on the world market is largely due to a reduction in supplies from Russia and the reluctance of OPEC countries to increase production,” he concluded.
The expert said that the impact of sanctions against the Russian economy on the world oil market will be long-term. “The departure of a number of oil companies from Russia will inevitably lead to a reduction in production. In turn, EU and US sanctions against shipping companies transporting Russian oil, as well as third countries buying it, can also act as a significant factor in rising prices,” the specialist said.
The EU embargo on seaborne imports of Russian oil comes into force on 5 December. At the same time, the EU, as well as the UK, plan to ban their enterprises from providing various services related to the supply of raw materials, subject to non-compliance with a certain price ceiling.
While the specifics of the new restrictions are not clear, and due to the uncertainty, ships with Russian oil faced the risk of being left at sea: insurers fear that buyers will begin to refuse cargo from Russia that reached their destination before December 5. In parallel, supply volumes have risen in anticipation of sanctions, and the jump, apparently, may reflect an attempt to have time to deliver oil before the introduction of new bans not only for European but also for global buyers.
#future #oil #prices #demand