Global oil prices, as indicated by the London-traded benchmark Brent, are expected to average $117 per barrel by end-March or 30% more than the forecast for last month, the US Energy Information Administration (EIA) said on Tuesday as Western sanctions on Russia boosted prices.
"We expect the Brent price will average $117/b in March... and $102/b in the second half of 2022," the EIA said. It had previously forecast $90 per barrel for February.
The United States and its allies have imposed comprehensive sanctions against Russia in response to its special military operation in Ukraine. The sanctions have slowed but not entirely eliminated the ability of Russian exporters of oil and gas to transact deals that require world financial networks and especially dollars.
The United States also announced on Tuesday that it was unilaterally banning imports of Russian oil, with President Joe Biden acknowledging that Europe may not be ready yet to join America in this direction due to the bloc's heavy reliance on Russian gas supplies.
Russia provides 10% of the world's crude oil needs and 40% of Europe's gas requirements. The United States, however, buys a limited amount of Russian oil, taking just 20% of the 10.5 million barrels per day exported by Russia in 2021.
The sanctions against Russia have led to a dramatic rise in global oil prices this year, with Brent rising more than 60% to reprise 2008 highs of above $130 a barrel. At Tuesday's lunch hour in New York, Brent traded at $125 a barrel, off the day's high of $133.
The EIA said it expects Brent to average $89 a barrel by 2023, but acknowledged that his price forecast is highly uncertain.
"Actual price outcomes will be dependent on the degree to which existing sanctions imposed on Russia, any potential future sanctions, and independent corporate actions affect Russia's oil production or the sale of Russia's oil in the global market," the EIA said. "In addition, the degree to which other oil producers respond to current oil prices, as well as the effects macroeconomic developments might have on global oil demand, will be important for oil price formation."
The EIA also forecast that US crude's West Texas Intermediate, or WTI, benchmark will average $101.17 for all of 2022. WTI was trading at $123 a barrel by the New York lunch hour on Tuesday. (ANI/Sputnik)
( With inputs from ANI )
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