The price of Brent crude ended the week at $86.39 after closing the previous week at 79.94. The price of WTI ended the week at $79.72 after closing the previous week at $73.39.

Crude prices were boosted at the end of the week with Russia announcing on Feb. 10 a reduction of 500,000 bbl/d starting in March. While there is some uncertainty if Russia consulted with other members of OPEC+, it appears that the other members will not take any immediate action in response to Russia’s production cut. The announced production cut is consistent with our current short-term forecast, which includes a reduction of 670,000 bbl/d in first-quarter 2023 in comparison to first-quarter 2022 and an average reduction of 460,000 bbl/d in 2023 compared to 2022.

What's Affecting Oil Prices This Week?

In our latest quarterly update of our global outlook for the oil markets, we are forecasting that global oil demand in first-quarter 2023 will be 1.54 MMbbl/d more than in first-quarter 2022. During 2023, we are forecasting that global oil demand will increase by 2.11 MMbbl/d in comparison to 2022.

The following is the regional breakdown for oil demand growth in 2023 in comparison to 2022:

  • Africa demand will increase by 0.17 MMbbl/d
  • Asia demand will increase by 1.81 MMbbl/d in comparison with 2022 (with China’s demand increasing by 0.75 MMbbl/d)
  • Russia and CIS demand will decrease by 0.14 MMbbl/d
  • Europe demand will decrease by 0.07 MMbbl/d
  • Latin America demand will increase by 0.14 MMbbl/d
  • Middle East demand will increase by 0.15 MMbbl/d
  • North America demand will increase by 0.06 MMbbl/d

With our forecasted demand and supply, the market will be in slight surplus during 2023. We are forecasting that price of Brent crude will average $87.70 in the first quarter of 2023 and $91.40 in the second quarter of 2023.

For a complete forecast of refined products and prices, please refer to our Short-term Outlook.

About the Author: John E. Paise, president of Stratas Advisors, is responsible for managing the research and consulting business worldwide. Prior to joining Stratas Advisors, Paisie was a partner with PFC Energy, a strategic consultancy based in Washington, D.C., where he led a global practice focused on helping clients (including IOCs, NOC, independent oil companies and governments) to understand the future market environment and competitive landscape, set an appropriate strategic direction and implement strategic initiatives. He worked more than eight years with IBM Consulting (formerly PriceWaterhouseCoopers, PwC Consulting) as an associate partner in the strategic change practice focused on the energy sector while residing in Houston, Singapore, Beijing and London.