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Oil Price Forecast: Unlikely to Hit $100 in 2023

File - In the evening, the outline of the oil pump

BNR – According to experts, the oil price may not reach 100 USD a barrel in 2023. This is due to several reasons like the low potential of an OPEC+ utilising deeper supply cut. Furthermore, China’s high crude oil stocks are projected to make prices steady.

Experts at Goldman Sachs link the latest rise in Brent crude to extra production cuts by OPEC+. It is worth noting that Brent crude is the benchmark for about 67% of the globe’s oil.

Goldman Sachs Projections

Also, worries about extreme interest rate hikes implemented to combat inflation in big countries. They, however, argue that the price may shift to $86 per barrel. This occurs as the market is expected to move into a lack in H2 2023.

The investment bank affirms that a substantially greater lack of 3.3mln barrels a day would be crucial to increase oil prices. This will make it improbable that OPEC+ will reduce output to increase the price to such an extent.

Suhail Al Mazrouei, UAE’s Minister of Energy, said that the actions OPEC+ takes are enough to bolster the crude market. Furthermore, OPEC+ is set to impose further measures if necessary.

JPMorgan recently lowered its oil price projections for 2023 and 2024 due to global supply growth offsetting rising demand. Also, inventory build-up lowers the risk of price hikes.

The bank revised its standard Brent price projection for 2023 to $81 a barrel. As for West Texas Intermediate (WTI), it is $76 per barrel. The US bank forecasts worldwide oil supply increasing by 2.2mln barrels a day in 2023, which will exceed the expected demand increase of 1.6mln barrels a day.

China’s Crude Oil Stocks Steady Prices

Goldman Sachs also stressed the possible effect of US shale companies increasing their production, as costs decrease. In June, Russia and Saudi Arabia declared extended and additional production cuts, respectively. However, Goldman Sachs highlighted that the cuts may be undermined if US shale output rises.

China, the globe’s 2nd biggest economy and top oil client is expected to be a crucial player in oil demand. China’s crude oil inventories are nearing record-high. In conclusion, the basics of the crude market are constantly showing signs of a more rigid market this summer.


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