Brent crude oil forecasts (forecast from 2022 onwards)
price cap on Russian oil and oil products by capping the price for which shipping companies can carry oil and insurance companies can cover oil. The cap is expected to come into effect on the 5th of December 2022, with the exact price still to be determined. The aim is to limit the revenue Russia receives from its oil without taking Russian oil off the market and risking a spike in oil prices. However, Russia has shown that it will not hesitate to retaliate, and gas is its major weapon. Due to the above factors and less dependence on fossil fuels in the future, we are forecasting a gradual decline in the oil price over the coming years.
Brent Crude ($/bbl)
Table 6.2
2021
70.9
2022
100.2
2023
92.3
2024
84.0
2025
76.0
In all, several countervailing factors could affect the oil price going forward (Table 6.2). In the near term, weak global growth seems to be weighing more heavily on prices. However, looking into next year we could see some upward pressure coming from the full sanctions on Russian oil by the EU, as well as faster Chinese real GDP growth if the authorities finally decide to abandon the ill-fated zero-Covid policy. Alternatively, additional sources of production could help ease supply concerns provided OPEC+ does not act aggressively to counter this. The application of the zero-Covid stance in China in 2023 will be key in giving global energy price trends direction
Upside and downside risks to future oil price movements
Table 6.3
Upside Risk
Downside Risk
Substitution from gas to crude oil OPEC+ production cuts
Slower global economic growth Additional sources of supply
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