Experts' 2023 oil price forecasts. Where will the price of Brent and WTI go?

Forecasts for brent oil price in 2023 are formulated by experts on the basis of various factors such as the current progress of the conflict in Ukraine and the sanctions that the European Union is imposing on Russia (already in 2022 it banned most imports of crude oil and from February 2023 also those of petroleum products). But also from the OPEC strategy and the request from China which is at the beginning of the post-covid restart. Precisely on April 2, the oil price forecasts for 2023 were revised by some experts due to the sudden decision of OPEC + to cut production.

Oil price: what OPEC+ decided

The Organization of the Petroleum Exporting Countries and its allies (OPEC+) on April 2 announced the reduction of the production of black gold by 1 million barrels per day starting from the month of May and until the end of 2023. A choice that has had inevitable repercussions on oil prices, both WTI and Brent. Specifically, Saudi Arabia will produce half a million barrels less, the United Arab Emirates -144 thousand, Kuwait -128 thousand, Iraq -211 thousand, Kazakhstan -78 thousand, Algeria -48 thousand and Oman - 40 thousand. According to reports, this measure is "precautionary" with the aim of "safeguarding the stability of the oil market". Meanwhile, Russia has reiterated that the cut of 500,000 barrels which was to last from March to June will continue throughout 2023. Not only the quotations, but also the oil price forecasts have been affected.

The rise of Brent and WTI: prices in focus

As anticipated, the first direct consequence of this news was the rise in oil prices, both in the Brent quotation and in that of the WTI. With OPEC's production cut to see 1 million barrels less per day, one of the most widely shared predictions for oil prices for 2023 is that volumes will increase in the near term. Out of a global consumption of about 100 million barrels per day, analysts predict a rapid return to $100 a barrel.

“Brent” and “WTI” are two terms used to indicate two types of oil and their respective benchmarks that follow the trend in the price of crude oil. For both indices, the reference value is the cost of oil per barrel.

Brent is the benchmark index for the Middle East, Europe and Africa, while WTI (West Texas Intermediate) is a blend of different types of oil extracted in the United States, precisely for these it represents the US market.

Goldman Sachs: the new 2023 oil price forecasts

After OPEC's decision, Goldman Sachs updated its oil price forecast for 2023. For Brent, the forecast is $95 a barrel for the end of the year, while previously the estimate was $90. The institute expects to observe the $100 again for December 2024. This revision also takes into account sanctions on Russia that could extend throughout the year.

JP Morgan's 2023 estimates

The bank released its 2023 oil price forecast in February. A few months ago JP Morgan argued that the price of Brent would not reach 100 dollars a barrel, barring exceptional geopolitical events. With OPEC maintaining the balance, the idea was to get to $90 a barrel, and increased production by 400,000 barrels a day.

Morgan Stanley: the latest forecasts for 2023

In February 2023, the bank's analysts had imagined Brent oil trading between $90 and $100 in the second half of the year. And at $95 in 2024. One wonders if they, too, will decide to revise their oil price forecasts for the current year.

Bank of America

According to the latest estimates published by Bank of America, Brent crude oil will reach $100 a barrel in 2023 mainly as a result of new demand from China. Ready to restart after the aftermath of the pandemic. The institute also supports an OPEC cut in production by up to 2 million barrels a day, with the intention of keeping prices high. Bank of America's forecast may be one of the most accurate 2023 oil price forecasts yet.

In a late 2022 interview, Citi's Ed Morse expected Brent oil to finish 2023 at $76 a barrel. The belief was that of seeing an increase in supply and a drop in demand, and consequently a drop in prices. Morse stressed the possible volatility of energy markets due to the political instability of some producers such as Iran, Iraq, Nigeria, Libya and Venezuela and the importance of considering the new sanctions against Russia.

In the light of the new export policy one of OPEC, we await a possible update of the oil price forecast for 2023. The increase in prices has already ignited concerns about a renewed increase in inflation. Just as it already happened in the 1970s when OPEC doubled prices and blocked exports