Oil prices will see a gradual rise this year as demand recovery spurred by China’s reopening and supply shortfalls due to sanctions on Russia offer some respite from global recession worries, a Reuters poll showed.
A survey of 49 economists and analysts forecast Brent crude LCOc1 would average $90.49 a barrel this year, up from the $89.37 consensus in December.
This is the first upward revision in forecasts for Brent crude since the October poll.
The global benchmark has averaged around $84 per barrel this month.
West Texas Intermediate (WTI) U.S. crude CLc1 is projected to average $85.40 per barrel in 2023, up from the previous month’s $84.84 consensus.
“The extent of China’s oil rebound following the repeal of its zero-COVID curbs, as well as Russia’s liquids production response to Western sanctions, will impact the oil balance,” said Ajay Parmar, associate director of global oil markets research at HSBC.
Earlier this month, the Group of Seven (G7) agreed to review the level of the price cap on Russian oil exports in March, a month later than originally planned, to provide time to assess the market impact of more caps placed on oil products.
Analysts remained divided on the impact of Western sanctions on Russian supply, the poll showed.
“This year is going to be a battleground between the bearish, imminent European and U.S. recessions versus the strength and speed of China’s reopening,” said Joe DeLaura, energy strategist for Rabobank.
Many analysts were sceptical about the severity and timing of such recessions, reassured in part by the pricing power of OPEC+ – which includes members of the Organization of the Petroleum Exporting Countries (OPEC) and others including Russia.
“OPEC+ will not be wavering in its stance to control supplies, and its move to preempt the global growth slowdown by cutting production late last year will continue to pay dividends,” said DBS Bank energy analyst Pei Hwa Ho.
OPEC+ is likely to endorse its current policy to cut output by 2 million barrels per day (bpd) through 2023 when it meets on Wednesday, sources told Reuters last week.