However, the overall reduction in Russian exports is likely to be less than initially expected, as the G7 oil price cap will allow countries importing oil from Russia to continue to access EU and UK insurance facilities, provided they adhere to the price cap.
Beyond Russia, oil supply will increase modestly, mainly from the United States, while OPEC+ production will remain subject to its production agreement.
As for natural gas, annual average prices are forecast to moderate in 2023.
Also, the World Bank forecasts natural gas demand to decline in 2023 as households and industrial users reduce their consumption, while rapid growth in renewable energy generation will help moderate natural gas demand for electricity generation.
However, further price increases are possible. Russia’s exports are expected to remain significantly lower than before the outbreak of the war in Ukraine.
In addition, competition for liquefied natural gas (LNG) will remain intense on a global scale, as European countries continue to import large volumes of LNG to replace lower imports from Russia.
Coal prices will fall from extremely high levels as production increases, especially in China and India.
While the main downside risk to energy price forecasts is weaker-than-expected global growth, oil consumption could also decline as a result of more persistent pandemic-related restrictions in China.
Upside risks are mainly related to supply factors. U.S. shale oil production could disappoint as producers focus on returning cash to shareholders rather than increasing production.
Spare capacity among OPEC members is minimal, and OPEC+ members continue to produce well below target, in part due to low levels of investment in new production in recent years.