Futures markets suggest that crude oil prices will slide by 16.5% year-on-year to an average $80.5, the October 2023 World Economic Outlook has revealed.
This is compared with an average price of $96.4 in 2022.
However, the commodity is expected to fall in the coming years to $72.7 in 2026
If this holds, fuel prices may not see much change at the pumps for the rest of the year.
The International Energy Agency expects oil demand to increase by 2023, outstripping supply in the second half of the year.
According to the October 2023 World Economic Outlook, uncertainty around the price outlook is elevated. Upside price risks stem from additional OPEC+ production cuts, a military escalation in the Black Sea, and insufficient investment in fossil fuel extraction.
Downside price risks stem from a widespread global economic relapse, a slowdown in Chinese oil demand, and faster penetration of electric vehicles.
Fuel prices went up marginally at the beginning of this month, but is unlikely prices will go up in the second pricing window beginning October 16, 2023.
Thanks to a rebound in July 2023 and August 2023, crude oil prices increased, by 4.4%, between February 2023 and August 2023, remaining, however, well below their peak of $115 in June 2022.
On the demand side, a weaker-than-expected rebound in China’s oil consumption, temporary recession fears because of banking woes, and tighter monetary policy in many major economies all contributed to downward price pressures, especially in the second quarter of 2023.
On the supply side, output curbs by OPEC+ (Organization of the Petroleum Exporting Countries plus selected nonmember countries) of 1.2 million barrels a day (mb/d) announced in April—coupled with additional voluntary cuts of 1 mb/d and 0.3 mb/d by Saudi Arabia and Russia, respectively—were only partly offset by strong oil output growth in non-OPEC countries, most notably in the United States, where oil output is expected to increase by 1.1 mb/d this year.