The European Commission (EC) has predicted that the average price of North Sea Brent crude will fall to $72.1 a barrel in 2024. That’s a 28.4 percent drop from 2022, the European Commission said in a forecast released in mid-May. 

The EC published its previous forecast in November 2022. The new forecasts for the average price per barrel in 2022, 2023 and 2024 have worsened: the Brent price forecast for 2022 is down 1.1% to $100.7 a barrel; for 2023 it’s down another 10.2% to $76.3 a barrel; and for 2024 to $72.1 a barrel, down 7.6% YoY. 

Spot and futures prices for Brent, the EC recalls in its report, rose in early April 2023 after OPEC+ countries announced voluntary cuts in oil production by the end of this year. But oil prices “continue to point to further moderation in the future, with quotes for both 2023 and 2024 slightly below those reached in the winter,” the paper said. The global oil market is subject to significant uncertainty related to Russian exports, the review noted.

The embargo on sea shipments of oil and oil products to the European Union and the ceiling on Russian oil prices have affected the price of Russian raw materials, the EC report said. The authors of the forecast noted that Russia managed to redirect oil exports to China, India and Turkey, but Russian Urals is trading at a discount of $20 per barrel to the benchmark Brent. The European Commission considers the prospects of global demand, including demand in China as mobility recovers, to be one of the key drivers of price trends over the next two years.

The European Commission has lowered its oil price forecast largely due to fears of a recession and a slowdown in China’s economic recovery. Supply shortages are expected by the second half of 2023. If the banking crisis leads to a sharp recession, oil prices could fall below $60 a barrel, but if the global economy manages to transition to growth, oil prices could rise to $90 a barrel or higher.

Earlier, we reported that Oil prices returned to decline after U.S. statistics release.