In its latest short term energy outlook (STEO), the US Energy Information Administration (EIA) boosted its Brent spot average price projection for 2023 by $4.67.
According to the EIA’s May STEO, the Brent spot price in 2023 will average $97.24 a barrel. The previous STEO, published in April, but the average Brent spot price for 2023 at $92.57 per barrel. According to the EIA’s May STEO, the Brent spot price will average $103.35 per barrel in 2022, which is two cents lower than the April STEO’s projection.
According to the most recent EIA STEO, the Brent oil spot price averaged $105 per barrel in April, a $13 per barrel decline from March.
“Crude oil prices remain above $100 per barrel following Russia’s full-scale invasion of Ukraine,” the EIA observed in its May STEO, “albeit down from March.”
“Russian sanctions and other independent business activities led to declining oil production in Russia and continue to cause significant market uncertainty about the possibility for more oil supply disruptions,” the EIA noted.
The EIA said, “These incidents happened against a backdrop of low oil inventories and ongoing rising oil price pressures.”
The EIA noted in its May STEO that its price projection is “very unpredictable,” and that actual price outcomes will be largely determined by how existing sanctions against Russia, potential future sanctions, and independent business activities affect Russia’s oil output or sale in the global market.
“Because we finalized our view on May 5, it does not contain an EU ban on Russian oil imports.” The bans reported at the time of writing, however, “would certainly lead to tighter oil balances and higher oil prices than our current prediction,” according to the EIA.
“How other oil producers react to current oil prices, as well as the implications macroeconomic events may have on global oil demand, will be significant for oil price formation in the coming months,” the EIA stated.
Because oil inventories are now low, the organization expects downward oil price pressures will be muted, and market conditions for significant price volatility to prevail.
Brent crude oil was trading at $105.62 a barrel at the time of writing. The commodity’s price has been fluctuating recently, with closing prices of $113.16 per barrel on April 18, $102.32 per barrel on April 25, $112.39 per barrel on May 6, and $102.46 per barrel on May 10. Brent was trading at roughly $67 per barrel around this time last year.