In 2022, the average price of Brent oil on the world market increased by about 42%, from $70.5 to $100 per barrel.
The achieved value was the highest over the past nine years, as evidenced by the materials of the World Bank and S&P Global.
Meanwhile, over the past 12 months, trading on the international energy market has been accompanied by sharp fluctuations in oil prices.
So, Brent met 2022 near $78 per barrel, but already in March, against the backdrop of the aggravation of the situation in Ukraine and the introduction of unprecedented sanctions against Russia by Western countries, prices briefly rose above $139 per barrel.
Later, global energy demand began to gradually weaken due to the threat of a global recession.
As a result, the cost of hydrocarbons began to decline, and in the first half of December, a barrel of Brent fell to $76.
Nevertheless, by the end of the year, quotes managed to recover to $86 after new Western restrictions against Moscow came into force.
In 2023, the situation in the oil market will continue to remain uncertain, experts say.
S&P Global forecasts that global energy demand could weaken further as the US and Europe risk an economic downturn.
In this case, the average annual price of a barrel of Brent will drop to $87, analysts do not exclude.
At the same time, experts from the Dutch banking group ING admit that the figure, on the contrary, will increase to $104 per barrel.
According to economists, raw materials will begin to rise in price again as production is reduced in Russia and the countries of the OPEC + alliance.
A similar point of view in an interview with RT was expressed by Natalya Milchakova, a leading analyst at Freedom Finance Global.
“Participants in the OPEC+ agreement returned to reducing oil production by 2 million barrels per day in the fall and are likely to adhere to this policy throughout the first half of 2023, until the June meeting.
Meanwhile, Russia can reduce the production of raw materials by about 6-7%, which will also have a positive effect on the growth of world prices,” the expert explained.
ceiling effect
Earlier, Russian Deputy Prime Minister Alexander Novak also warned about a possible reduction in Russian oil production.
According to him, Moscow can take such a step after the restrictions imposed by the West on the supply of raw materials from the Russian Federation.
“We are ready to go for a partial reduction in production ... We may have a reduction (at the beginning of 2023. -
RT
) somewhere by 500-700 thousand barrels per day, this is about 5-7% for us.
This is an insignificant amount, but nevertheless such risks exist, ”Novak said in an interview with the Rossiya 24 TV channel.
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© Ivan Fedorov
Let's remind, since December, 5th the European Union has refused sea deliveries of the Russian oil.
At the same time, the EU, the G7 states and Australia banned their companies from insuring and transporting raw materials from the Russian Federation to third countries at a price higher than $60 per barrel.
From February 5, 2023, the relevant restrictions should also apply to petroleum products.
In response to this decision, Russian President Vladimir Putin on December 27 signed a decree on countermeasures.
According to the document, Moscow will stop supplying energy to those buyers who join the price restrictions.
At the moment, Russian companies continue to reorient their oil supplies to the countries of Asia, Africa and Latin America.
At the same time, it may take some more time for businesses to fully replace European consumers, so the production of raw materials will have to be somewhat reduced for the time being.
“We believe that in the current situation, it is even possible to take the risks of reducing production, rather than be guided by the sale policy regarding the price ceiling.
Today it is $60, tomorrow it can be anything, and becoming dependent on some decisions made by unfriendly countries is unacceptable for us,” Alexander Novak explained.
At the same time, as the deputy chairman of the Cabinet of Ministers emphasized, attempts to artificially regulate prices could ultimately hit the authors of such initiatives.
Thus, intervention in market instruments will only lead to risks, a shortage of resources on the world market and, as a result, an even greater rise in the cost of raw materials, the Deputy Prime Minister is sure.
“Our colleagues, the so-called partners, who introduce all these economic measures (considering them economic, but in fact they are not economic, but political), from the point of view of the economy, they only harm themselves,” Novak emphasized.
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According to Natalia Milchakova, the reduction in the extraction of raw materials in Russia will inevitably lead to a drop in the country's budget revenues.
However, according to the expert, the decline in oil and gas revenues will not be critical for the state treasury.
Moreover, as new transport routes are established, already in the second half of 2023, hydrocarbon production volumes may return to their previous values, says Ronald Smith, senior analyst at BCS World of Investments.
“In the first half of the year, exports of oil and oil products from Russia may decrease by 1 million barrels due to the combined effect of the embargo and the price ceiling.
This will increase the cost of raw materials in the global market.
However, we expect that this factor will largely exhaust itself by December, ”said the interlocutor of RT.
In a wide corridor
According to experts, against the background of the expected decline in production in Russia and the OPEC+ countries, the United States is now striving to increase its production of hydrocarbons.
According to the forecast of the US Energy Information Administration (EIA), in 2023 the States will produce an average of about 12.34 million barrels per day, compared with 11.87 million in 2022.
In theory, an increase in US supply should put pressure on the cost of raw materials in the world.
However, according to Natalia Milchakova, the capacities of American companies remain limited, so in the near future Washington is unlikely to be able to replace the falling volumes of Russian and Middle Eastern oil on the global market.
Moreover, according to the expert, demand for energy resources from Asian countries may increase in 2023.
The economies of India and China are expected to recover from the effects of COVID-19.
As a result, the consumption of raw materials in these states will increase, which will provide additional support to world prices.
However, in the context of continuing uncertainty, the cost of raw materials over the next 12 months may fluctuate in a fairly wide range, Milchakova believes.
“We believe that from January to December, the price of Brent may vary from $65 to $125 per barrel.
At the same time, the price of Russian Urals oil, which is traded at a discount to Brent, is likely to be in the range of $45-100 per barrel, ”the expert suggested.