Crude oil prices projected to hit $93.69/bbl this quarter, $101.81/bbl in a year, ET EnergyWorld

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New Delhi: Crude oil prices are forecast to reach $93.69 per barrel by the end of the current quarter and rise to $101.81 in 12 months time, according to projections from Trading Economics‘ global macro models and market analysts.

Brent crude futures edged higher by 5 cents, or 0.1%, to $93.98 a barrel by 0027 GMT on Monday, while U.S. West Texas Intermediate (WTI) crude was at $90.92 per barrel, up 15 cents or 0.2%. Both markers are hovering at their highest levels in over ten months, buoyed by a confluence of supply cuts from major producers and optimistic demand forecasts.

Market deficit widening, says OPEC, EIA, IEA

The Organization of the Petroleum Exporting Countries (OPEC), the U.S. Energy Information Administration (EIA), and the International Energy Agency (IEA) have all indicated that the oil market is expected to face larger deficits in the upcoming quarter. This deficit is driven by extended production cuts from key suppliers such as Saudi Arabia and Russia, coupled with an uptick in global oil demand.

Chinese demand a strong factor

Increased output from Chinese refiners and fresh stimulus measures from Beijing are supporting the bullish outlook for oil. China remains the world’s largest importer of crude oil, and strong export margins have led to a demand surge, affecting global oil prices.

EIA raises second half forecast

The EIA has raised its price forecast for Brent crude to average $86 per barrel in the second half of 2023, a $7 increase from its earlier estimates. The upward revision aligns with broader market expectations of a sustained deficit and rising demand.

Fed decision this week could impact prices

Investors are closely watching the upcoming policy decision from the U.S. Federal Reserve, expected later this week. While the Fed is anticipated to keep interest rates steady, a hawkish stance could influence broader financial markets and indirectly impact oil prices.

India’s economic balancing act

India, the world’s third-largest oil importer, could face inflationary pressures and fiscal challenges if oil prices continue to climb. A more than $10 hike in oil prices could result in a 20 basis-point increase in India’s current account deficit, potentially raising it to 1.8% of GDP if the Indian crude basket averages around $90 per barrel for the remainder of the year.

Oil marketing companies in India may absorb extra costs, thereby reducing the immediate risk of fiscal slippage, and avoiding a direct pass-through of costs to consumers.

  • Published On Sep 18, 2023 at 07:23 PM IST

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