U.S. Crude Output Will Surpass Pre-pandemic Levels in 2023: EIA

Washington D.C: The recent data released by the U.S. Energy Information Administration in its Short-Term Energy Outlook (STEO) for June 2022 shows that WTI is averaging USD 102.47 per barrel in 2022, with an increment of USD 4.27 per barrel. Ongoing geopolitical uncertainty in the eastern European region, coupled with the overall impact of the demand outlook post-pandemic, led to an increase in the price volatility in the anticipated price outlook for 2022. These estimates were backed by the supply-demand deficit prevailing over the current market outlook, and consistently rising global demand is becoming more concentrate on U.S. suppliers, which may lead to an increment in Crude output in the U.S.   

As the demand started to increase after the global economy started to rebound from the losses incurred due to the COVID pandemic in 2020 and 2021, the full-scale Russian invasion of Ukraine was a tremendous setback to the global economy. As per stats presented by the World Bank, Global GDP growth plummeted to 2.9% in 2022 compared to 5.7% in 2021 amidst the higher inflation and tighter financial conditions presented by the geopolitical differences amongst the major economies across the region.

In addition, the retaliatory measures taken by the U.S. and the E.U. on Russia's energy commodities supplies have worsened the situation as most nations have shifted policies to source Crude Oil from other suppliers, leading to a significant trade shift pattern. As a ripple effect, the demand becomes more concentrated amongst the other major suppliers in all regions, especially in the Middle East, against the slowly increasing Crude output, causing a supply deficit and gyration in the prices of the upstream energy cycle.

According to ChemAnalyst pricing intelligence, the global oil market tends to recover from the losses due to the COVID pandemic. The June Oil Market Report published by the IEA forecasted that the oil demand would expand by 2.2 million barrels per day to 106.7 (approx.) million barrels per day in 2023, surpassing the pre-pandemic levels. However, market players will closely monitor the status of current and upcoming sanctions on Russia, as the geopolitical gyrations in the eastern European region may likely hinder the estimated supply-demand outlook of the global oil market. Furthermore, sanctions were likely to force Russia to shut oil wells, and the production levels may differ from the anticipated outlook.