Dan Yergin expects oil at $90 in 2023 but says there’s a chance it could go as high as $121 when China fully reopens, but warned there are three major uncertainties looming over the market.
“Our base case for 2023 is $90 for Brent but you have to look at other cases,” the S&P Global vice chairman said, adding there are three major uncertainties: the Federal Reserve’s decisions, China demand and Moscow’s reaction to the price caps.“If China gets over Covid … then you add a lot of demand to the market,” Yergin said.
That could be “one big boost” and push prices to $121 a barrel, building on strains caused by underinvestment in oil and gas, Yergin said. That would be near highs set in March after Russia invaded Ukraine. On the flipside, prices could fall to around $70 per barrel in a recession.
In the past three weeks, local and central government authorities in China loosened several strict Covid measures that had required people to stay home and businesses to operate mostly remotely. Oil demand from the world’s top importer could reach 15.7 million barrels per day in 2023, which is around 700,000 barrels higher than 2022, S&P said in its most recent forecast.
EU energy ministers on Monday agreed to cap natural gas prices at 180 euros per megawatt hour, but the European Commission cautioned that the measure could be suspended if the “risks outweigh the benefits.” In Asia’s Wednesday morning trade, Brent crude futures added 0.40% to $80.31 a barrel, while U.S. marker West Texas Intermediate futures traded up 0.33% at $76.48 per barrel.
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