Many analysts predict that this year the black gold market will mainly experience a drop in quotations. Among the key factors that can negatively affect the dynamics of oil prices are the slowdown in global economic development and the high value of the national currency of the United States. Another important factor is the excessively high cost of oil relative to its commercial reserves.
At the same time, experts do not exclude that during the first months of 2023, oil prices may grow due to the fact that the market will need to adapt to the embargo on supplies from the Russian Federation. At the same time, they believe that by the end of this year the market will be able to come to a balance.
In addition, in the second half of last year, the United States Department of the Treasury granted Chevron permission to produce oil on Venezuelan territory, albeit with certain restrictions. The ministry also extended until May 26, 2023, the period of validity of license permits for four major players in the oilfield services market: Schlumberger, Weatherford, Halliburton and Baker Hughes.
The US Treasury notes that such licenses only allow transactions that relate to the Chevron JV in Venezuela. They do not lift the ban on any other transactions with Venezuelan oil company PDVSA.
Goldman Sachs cuts its oil price expectations
In early January, the American banking organization revised downward the forecast for the price of “black gold” in 2023. Estimated Goldman Sachs cost of one barrel of oil in January-March of this year has been reduced from $115 to $90. The bank also expects the price to rise to $95 in April-June, while before it was talking about $105.
Analytical expectations were revised mainly due to a drop in oil consumption in China, an increase in oil production in Kazakhstan and Nigeria, as well as large deliveries from Russia to Asian markets.
Against the backdrop of an increase in production and a slowdown in the economy, Goldman Sachs predicts an excess supply of “black gold” during the first quarter of 2023. The bank also expects average oil prices to rise to $105 per barrel in 2024.
Other analysts have published similar forecasts before. Thus, JPMorgan Chase expects that this year the average price of Brent will be $90, and next year it will rise to $98. After the Russian Federation unleashed a war against Ukraine, this bank predicted the cost of a barrel of “black gold” in 2023 at $98.
At the same time, the US Energy Information Administration believes that this year a barrel of oil will cost an average of $92.
Morgan Stanley expects changes in the oil market in the second half of 2023
This bank expects that in the third and fourth quarters of this year, the demand for “black gold” will recover. One of the main factors that will contribute to this will be the opening of the borders of the PRC. According to analysts, equilibrium in the oil market will be achieved in April-June 2023. After that, the situation will begin to become tougher, which will lead to an increase in oil prices.
Morgan Stanley believes that by the end of this year the price of Brent crude will rise to $110, as supply will soon reach the ceiling, and reserves are low.
The banking organization also believes that after China fully opens its borders, the demand for oil in it will increase by about 1 million barrels per day. This figure will gradually increase throughout 2023. Morgan Stanley believes that disruptions in oil supplies from Russia, caused by price restrictions, will reach 1 million barrels per day.
Barclays has said in the past that a slowdown in global productivity could force the bank to revise its 2023 Brent price forecast at $98/bbl.