The Federal Government’s 2023 budget benchmark of $75 gained some momentum yesterday as top oil traders projected that the price of the commodity could hit between $90 and $100 per barrel range in the second half of the year.
This is as global demand is set to reach record levels amid constrained supply, Russell Hardy, CEO at the world’s largest independent oil trader, Vitol Group, said on Monday.
“The prospect of higher prices in the second half of the year, in the sort of $90-$100 range, is a real possibility,” Hardy told Bloomberg in an interview. Nigeria’s crude oil production for 2023 has been pegged at 1.69 million barrels per day.
The Federal Government believes that with these benchmarks, the country will be able to fund the 2023 budget. According to Hardy, global oil demand will rise by 2.2 million barrels per day (bpd) in 2023 compared to 2022 and will reach a record level, driven by a jump in diesel, naphtha, and liquid petroleum gas (LPG) demand.
“You don’t have much room on the supply side is the reality, so the potential for a rally is certainly there,” Hardy told Bloomberg. Peak oil demand is expected to come around the end of this decade amid rapid decarbonization, but investment in oil supply will still be needed, Vitol’s top executive said.
Major U.S. shale operator Pioneer Natural Resources also sees $100 per barrel by the end of the year, while some banks are not convinced prices will hit triple digits in 2023. With a significant pickup in Chinese demand, Brent Crude prices “will break $90 this summer and climb back up to $100 sometime in the second half of the year,” Pioneer CEO Scott Sheffield said earlier this month.
Brent Crude prices are not expected to reach $100 per barrel in 2023 unless a major geopolitical event rattles markets again, JPMorgan said this month. Russian crude oil production is expected to recover by June, while high price levels would prevent the U.S. from repurchasing crude to refill the Strategic Petroleum Reserve (SPR), according to the Wall Street bank.