Brent oil prices are expected to remain around $90 per barrel throughout the next five years, according to my eighth annual survey of energy market professionals.
Forecasts are mostly $4-$10 per barrel above predictions at the time of the 2022 survey, conducted before Russia’s invasion of Ukraine, and up by around $20 compared with the 2020 survey, before the coronavirus pandemic.
In this year’s survey, prices are forecast to average $87 in 2023, down from $99 realised in 2022, when prices surged following Russia’s invasion and sanctions imposed in response by the United States and European Union.
Forecasts for 2023 are tightly clustered, with half of respondents expecting the average price to lie between $80 and $95, and more than 90% expecting the average to lie between $70 and $105.
Prices are expected to continue averaging around $90 from 2024 to 2027, with a slight downward skew in forecasts later in the period.
Forecast prices are $15-20 per barrel above where the futures strip was trading at the time of the survey, a similar premium to the one revealed in last year’s survey, but up from a premium of around $10 before the pandemic.
Understandably, there is more dispersion in forecasts for later years, reflecting greater uncertainty about the evolution of the business cycle and structural changes affecting the industry.
But uncertainty over all time horizons has jumped significantly following the pandemic and continued to increase in the most recent survey.
Both short-term forecasts for 2023-2024 and longer-term forecasts for 2025-2027 are characterised by much higher standard deviations than comparable forecasting horizons before the pandemic.
Conflict in Ukraine, sanctions on Russia, intensifying rivalry between the United States and China, lingering pandemic disruptions, and the slowdown in the business cycle all seem to be combining to make forecasts more uncertain.