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An economic downturn is anticipated to affect oil prices in 2023.

According to a Reuters poll released on Friday, oil prices are expected to see modest increases in 2023 as a result of COVID-19 outbreaks in China and a worsening global economic environment, which will somewhat offset the effect of supply shortages brought on by Russian sanctions.

Brent crude was predicted to cost $89.37 a barrel on average in 2023 by 30 economists and analysts, which is about 4.6% less than the $93.65 consensus predicted in the November survey. In 2022, the worldwide benchmark averaged $99 per barrel.

In 2023, the average price of U.S. crude is predicted to be $84.84 per barrel, down from the consensus price of $87.80 last month.

According to Bradley Saunders, assistant economist at Capital Economics, “we expect the world to enter a recession in early 2023 as the repercussions of high inflation and rising interest rates are felt.”

Brent has lost more than 15% of its value since early November and was trading at roughly $84 per barrel on Friday as China, the world’s top crude oil importer, experienced an increase in COVID-19 cases that clouded the outlook for the country’s oil demand growth. [O/R]

According to Edward Moya, senior analyst with OANDA, “the oil market is still tight despite a weaker global demand picture as recession fears run wild.” “China will be the main focus in the first quarter of next year,” he added.

According to the majority of analysts, China’s COVID-19 restrictions will be loosened in the second half of 2023, and central banks will be less aggressive with interest rates.

According to the study, restrictions imposed by the West on Russian oil are likely to have little effect.

The price cap, which was intended to provide third-country purchasers with bargaining power, would not have an impact, according to Goldman Sachs (NYSE:GS) analysts.

The delivery of oil and oil products to countries taking part in the Group of Seven (G7) price cap will be prohibited beginning on February 1 for five months, according to a directive approved by Moscow this week.

“OPEC+ will probably be ready to increase output to prevent prices from rising too high in the case of a substantial decrease in Russian exports (which we do not expect to occur),” data and analytics firm Kpler stated.

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