World Bank projects 11% energy price decline in 2023
The energy prices will decline by 11% in 2023 after this year's 60% surge following Russia's invasion of Ukraine, although slower global growth and Covid restrictions in China could lead to a deeper fall, said World Bank on Wednesday.
The bank in its latest Commodity Markets Outlook projected a Brent crude average price of $92 a barrel in 2023, easing to $80 in 2024 but well above the five-year average of $60, reports Reuters.
"Russia's oil exports could drop by as much as 2 million barrels per day due to a European Union embargo on Russian oil and gas products, coupled with restrictions on insurance and shipping, that are take effect on 5 December," the bank stated.
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A proposed G7 oil price cap could also affect the flow of oil from Russia, but needed the participation of large emerging markets and developing countries to be effective, it said, calling the mechanism "untested."
The World Bank said the stronger dollar - and the shrinking value of the currencies of most developing economies - had driven up food and fuel prices that could aggravate the food insecurity already affecting 200 million people worldwide.
"The combination of elevated commodity prices and persistent currency depreciations translates into higher inflation in many countries," said Ayhan Kose, who heads the World Bank group that produces the report.
He said emerging market and developing economies should brace for "a period of even higher volatility in global financial and commodity markets."
Currency depreciation meant that almost 60% of oil-importing emerging markets and developing economies saw an increase in domestic currency oil prices from Russia's invasion of Ukraine.
Nearly 90% of these economies also saw a larger increase in wheat prices in local currency terns, it said.
Both natural gas and coal prices are projected to decline in 2023 from record highs in 2022, but Australian coal and US natural-gas prices are still expected to be double their average over the last five years by 2024. European natural gas prices could be nearly four times higher, it said.
Coal production, meanwhile, was increasing significantly, as major exporters boosted output, putting climate-change goals at risk.
