EIA's 2023 Brent price forecast shows a drastic 7.5% drop

The US Energy Information Administration (EIA) has forecast the Brent spot price to average $79/bbl this year, $6/bbl lower than its April outlook.

PHOTO: Getty Images

In its May short-term energy outlook, the agency has also lowered its forecast for the Brent spot price next year to $74/bbl from $81/bbl in April.

"Beginning in 2Q24 [second quarter of 2024], we expect consistent global oil inventory builds over the rest of the forecast period as global oil production outpaces global oil demand, putting downward pressure on crude oil prices," EIA says.

Meanwhile, the US Department of Energy’s statistical agency sees a marginal upside to prices in the coming months due to a “seasonal rise in oil consumption and a drop in OPEC crude oil production.”

Demand and supply outlook

EIA has kept its outlook for global oil demand and supply unchanged for this year and 2024. It expects a fairly balanced oil market through 2024.

Global liquid fuel consumption is predicted to increase from 99.4 million b/d in 2022 to 100.9 million b/d this year, and by an additional 1.7 million b/d to 102.7 million b/d in 2024. It expects China and India to account for a large portion of this demand growth.

World oil production is expected to rise from 100 million b/d in 2022 to 101.3 million b/d this year.

EIA also sees a slight increase in Russia’s oil production in the second half of this year. As far as core OPEC producers are concerned, it has maintained its overall supply projection. The OPEC crude oil production is still expected to average 33.7 million b/d this year.

However, it highlights that in addition to the voluntary production cuts “recent disruptions to crude oil exports in Iraq and a force majeure limiting crude oil exports in Nigeria” can hinder the group's oil output this year.

By Konica Bhatt

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