Despite war in Ukraine, US expects higher oil production

The U.S. government expects crude oil production to increase to an average of 12 million barrels of oil a day in 2022.

The U.S. Energy Information Administration’s latest Short-Term Energy Outlook says U.S. crude oil production had fallen below 11.6 million b/d in December 2021 which was the most recent monthly historical data point. That’s a decline of 0.2 million b/d from November 2021.

Based on current world politics, i.e. the invasion of Ukraine by Russia, the EIA forecasts U.S. oil production should reach a record-high of 13 million barrels a day in 2023. The previous annual-average record was 12.3 million a day set in 2019.

As for oil prices, Brent crude oil spot prices averaged $97 a barrel in February but because of the war in Ukraine, prices closed at nearly $124 in the first week of March. disruptions. The EIA also predicts that depending on the war between Russia and Ukraine, crude prices will eventually fall to $89 a barrel in 2023.

“However, this 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,” stated the EIA.

The EIA also predicts global consumption of petroleum and liquid fuels will average 100.6 million b/d for all of 2022, up 3.1 million from 2021. But its forecasts were also completed before Russia’s invasion of Ukraine.

“The outlook for economic growth and oil consumption in Russia and surrounding countries is highly uncertain. Oil consumption will depend on how economic activity and travel respond to recent and any potential future events and sanctions.”