Oil prices may remain below $50 a barrel until 2023

MOSCOW – Oil prices may remain below USD50 per barrel until 2023, according to the October report the International Energy Agency (IEA) submitted to TASS.

“The uncertain outlook that could see the drawdown of stocks falter is reflected in the fact that physical prices have weakened and this has brought down the front of the forward curve for Brent crude oil. The longer term offers little encouragement for the producers; the curve shows prices not reaching USD50/bbl until 2023,” the agency says.

The IEA said the forecast for a decline in demand by 8.4 million barrels per day (bpd) for this year to 91.7 million bpd is relevant only if OPEC+ fully complies with the terms of the deal to reduce production, and world reserves decrease by 4 million barrels per day in the fourth quarter.

“With the 1.9 mb/d increase in the OPEC+ production ceiling currently planned for 1 January, there is only limited headroom for the market to absorb extra supply in the next few months. Also, there is a risk that the demand recovery is stalled by the recent increase in Covid-19 cases in many countries,” the agency says.

According to the estimates of the International Energy Agency, the demand for oil in July 2020 grew by 3.4 million bpd amid an improvement in the epidemiological situation and the lifting of restrictive measures around the world.

However, the second wave of coronavirus disease 2019 (Covid-19) and new quarantine measures are slowing down the growth in demand, the report said.

The IEA also maintained its forecast for growth in demand by 5.5 million bpd next year to the level of 2020.