After a year of economic pain and rising prices, what are the expectations for the energy market in 2023?

London

- The year 2022 can be described as the year of "energy" par excellence. Since the outbreak of the Russian-Ukrainian war last February, the oil and gas file has turned into a priority for all countries of the world, and many countries have gone through - and still are - difficult circumstances, due to the significant rise in energy prices. As well as what the West calls Russia's "energy war" against Europe.

The consequences of the Russian war are still going on, because Russia is one of the largest exporters of oil and gas in the world, and because of the great European dependence on Moscow in securing the energy needs of the old continent.

The world will emerge from the year 2022 with many economic pains, foremost of which is the rise in energy prices, and the most important question is whether this rise in prices will continue in the year 2023?

What will the oil and gas market look like over the next year?

catastrophic situation

The course of oil demand in the world will be determined by 3 factors, the first is the level of recession that the global economy has entered, the second is the performance of the Chinese economy, which is experiencing the impact of the resurgence of the Corona virus, and the third is the developments of the war in Ukraine.

Any indication that the end of the war is approaching could lead to a decline in oil prices.

However, it is certain that the demand for oil will continue to rise during the year 2023, and according to the International Energy Agency, the demand for oil will rise to reach 102 million barrels per day, despite the expectations of a slowdown in the performance of the Chinese economy and the state of recession in the European Union.

Global demand will increase by about 1.7 million barrels of oil per day in 2023 compared to 2022, when production reached about 100 million barrels of oil per day, and according to the International Energy Agency, this level is the highest ever.

The biggest fear of energy experts remains what was expressed by the British newspaper, the Financial Times, that Russia will resort to unilaterally cutting off oil supplies to the global market, if it sees that India and China are unable to absorb the surplus that was being exported to Europe. This decision will be enough to cause a shock in the oil market.

The British newspaper concludes that oil prices in the year 2023 will determine the price of everything in the world, and the price of black gold will be determined by which one will cause fear in the oil market, is it recession or insufficient supply?

The Financial Times expects that the last quarter of 2023 may be defined by "a state of chaos and a catastrophic situation due to peak demand."

All these expectations indicate that oil prices will not witness any decline or stability in the coming year, similar to what happened this year.

What about gas?

According to the annual report of the "Dutch Financial Group" (ING), the year 2022 witnessed great popularity in order to conclude contracts for the supply of liquefied natural gas, and the volume of contracts concluded amounted to about 80 million tons annually of gas, and the United States accounted for 75% of exports, and perhaps This situation is what prompted the Europeans (Germany and France) to criticize the US administration and implicitly accuse it of exploiting the global situation to its advantage.

According to the expectations of the Dutch financial group, the volume of contracts to be concluded in 2023 will be less than this year, despite the United States continuing to search for more partners in the gas market as well as China.

However, the expectations of the experts of the Dutch financial group say that the owners of financial portfolios and those who invest in the gas sector will be more selective in purchasing LNG contracts.

Europe will remain the continent that suffers the most from providing its gas needs during the next year, and this explains that the Energy Regulatory Agency in Britain announced that it will raise the ceiling of the annual gas bill from $2,500 to $3,200 during the next year, due to expectations of a continued rise in gas prices.

Price flames

Every citizen who does not live in an oil country or where natural gas is available should expect the continuation of the rise in energy prices. According to the US Energy Information Administration, the prices of oil, gas, coal and electricity will rise or, at best, will maintain their record level during the year 2023.

The American establishment links this rise to 3 main factors, the first of which is the war in Ukraine, the performance of the Chinese economy, and then the recession that hits European countries.

As for the World Bank, it expected energy prices to decline by about 11% during the year 2023, after increasing them by 60% during the current year due to the Russian war in Ukraine. According to the World Bank, the Chinese economy is threatened with a slowdown in its growth, which will affect the global demand for energy. .

The World Bank expected the price of a barrel of oil to remain at $90 per barrel in 2023.

On the other hand, gas prices will maintain the pace of rise, as they will reach 4 times the prices recorded in 2019, which will affect the inflation rate in importing countries, which also means higher interest rates in them, and thus more economic recession.