The U.S. Energy Information Administration (EIA) revised its projections for U.S. and international benchmark oil prices in 2023 and 2024 upward in its monthly report released on Tuesday, citing the decision by OPEC and its allies to cut production by 1.6 million barrels per day as the main cause.
The EIA now predicts that Brent crude will average $85.01 per barrel this year, up 2.5% from its prior projection, and that the global benchmark would likely average $81.21 per barrel in 2024, up 4.7% from its earlier forecast. The U.S. energy body also raised their pricing forecasts for West Texas Intermediate crude by 2.8% this year to $79.24 and by 5.1% next year to $75.21.
The revision came after OPEC and its allies, including Russia, referred to altogether as OPEC+, announced crude-oil production cuts for 2023. Despite the large reduction in output from OPEC+, EIA Administrator Joe DeCarolis has stated, “we expect growing global production —especially in North and South America— to offset those cuts.”
Growth in non-OPEC countries is expected to drive global liquid fuel production up by 1.5 million b/d in 2023 to 101.3 million b/d, followed by another 1.1 million b/d to 103.3 million b/d in 2024, according to the EIA.
Recent volatility in the US and European banking sector, the EIA stated, might contribute to weaker-than-anticipated demand growth, which could lead to lower oil prices than predicted.