BAKU, Azerbaijan, Jan.19. Energy prices have fallen sharply from mid-year highs in the second half of 2022, with average prices for all hydrocarbons (except liquefied natural gas, or LNG) set to register double-digit declines in 2023, Trend reports with reference to the Economist Intelligence Unit (EIU).
“However, prices will remain elevated at close to current levels. We expect oil prices to average more than US$85/b in 2023 as OPEC production (including Russia) falls by about 3m barrels/day from its recent peak in late 2022. OPEC unity and commitment to lower production quotas in the face of pressure from Western countries should be watched in 2023,” reads the latest EIU report.
The EIU experts also do not expect a significant easing of European and US natural gas prices from current levels before 2024.
Reportedly, Russian gas supplies to the EU will remain cut off, which will have lasting consequences for the European market, despite ongoing efforts to switch to alternative supplies and imports of LNG. This will keep prices elevated in 2023. Increased global demand for LNG will boost US natural gas prices and sustain higher LNG contract prices, which will fall only moderately in 2023.
In general, it is expected that most commodity prices, especially softs, will recede in 2023 in the face of slowing demand globally, but an only limited increase in supply means that prices will remain high in level terms. Prices of energy commodities, most base metals and several agricultural commodities surged in 2021, and then again after the onset of the war in Ukraine in February 2022. Although commodities prices will not fuel global inflation in 2023 as they did in 2021-22, upside risks to our baseline price forecasts are increasing and largely centre on China, climate change and continued conflict in Ukraine.