Barclays cuts 2023 oil price forecasts on resilient Russian output

Barclays lowered its 2023 oil price projections on Wednesday, citing higher-than-expected Russian output, and warned the market might go into deficit in the second half of the year due to rising Chinese demand.

The bank reduced its average projections for the Brent and West Texas Intermediate (WTI) benchmarks to $92/b and $87/b, respectively.

It also predicted that Brent would average $97/b next year and WTI would average $92/b.

According to the experts, the market might turn into a deficit of 500,000 barrels per day (bpd) in the second half of this year as China’s reopening from pandemic restrictions “matures” and supply growth from outside the OPEC+ producer group slows.

China’s oil demand could increase by 500,000 to 600,000 bpd in 2023, Haitham Al Ghais, the secretary general of the Organization of the Petroleum Exporting Countries (OPEC), said on Tuesday at the CERAWEEK conference, with global oil demand seen rising by 2.3 million bpd in 2023.

Barclays, meanwhile, revised its 2023 demand estimate 150,000 bpd higher due in part to a somewhat improved growth outlook for the United States and Europe. It sees a 900,000 bpd increase in Chinese demand this year.

Late last year, the Group of Seven countries, the European Union, and Australia agreed on a price ceiling on Russian oil in order to deprive Moscow of cash for its conflict in Ukraine.

According to Barclays, the possibility of a slowdown in broader economic activity remains due to flat industrial output and ongoing monetary tightening.

At 1103 GMT, Brent crude prices were up 0.1% to $83.40 per barrel, while US WTI crude futures were down 0.1% to $77.49 per barrel.