Oil prices will remain higher than $100 per barrel in the coming months, reflecting the geopolitical risk from Russia’s war in Ukraine and the tight energy markets with the current and potential future sanctions against Russia, the Energy Information Administration (EIA) said on Wednesday.
Brent Crude prices are expected to average $105.22 per barrel this year, the EIA said in its latest Short-Term Energy Outlook (STEO) last week, significantly raising its February forecast of $82.87.
In its March STEO last week, the EIA said it expects Brent Crude prices to average $117 a barrel in March, $116 for the second quarter of this year, and $102 per barrel in the second half of 2022.
WTI Crude, the U.S. benchmark, is set to average $113 a barrel this month and $112 per barrel for the second quarter of 2022.
Early on Wednesday, before the EIA inventory report, WTI was up 2% at over $98, and Brent was rising by 1.6% to $101.46.
EIA’s oil price forecast, however, “is subject to heightened levels of uncertainty due to various factors, including Russia’s further invasion of Ukraine, government-issued limitations on energy imports from Russia, Russian petroleum production, and global crude oil demand,” the administration said.
The current forecast Brent price also increased the forecast for the U.S. retail gasoline price, which the EIA expects to average $4.00/gal this month and continue rising to a forecast high of $4.12/gal in May before gradually falling through the rest of the year. The U.S. regular retail gasoline price is now seen to average $3.79/gal this year and $3.33/gal in 2023. If realized, the average 2022 retail gasoline price would be the highest average price since 2014, after adjusting for inflation, the EIA said.
As of March 16, the national average gasoline price was $4.305/gal, according to AAA data.
“This war is roiling an already tight global oil market and making it hard to determine if we are near a peak for pump prices, or if they keep grinding higher. It all depends on the direction of oil prices,” Andrew Gross, AAA spokesperson, said on Monday.