Forecasters at the US Energy Department on Tuesday ramped up their forecasts for American oil and gasoline prices next year, citing new steps by Saudi Arabia and OPEC+ to restrain the supply of oil.
The US Energy Information Administration dimmed its estimate of global oil production through 2024 because of Saudi Arabia's decision to slash oil production and an agreement by OPEC+ to extend its output cuts.
Citing those supply cuts, the EIA said it expects "some upward pressure" on oil prices, "notably in late-2023 and early-2024."
The near-term impact will be modest, according to the analysis, with the forecast for US and Brent oil prices rising by around 2% for the rest of the year, compared with the May forecast. For gasoline, the EIA now sees retail prices averaging $3.41 a gallon during the third quarter, up by just 2.7% from the May forecast.
But the bigger impact will be felt in 2024. The EIA boosted its forecast for US oil prices by 11.4% for the second quarter of next year and 14.5% for the third quarter. Oil prices are now expected to average $80 a barrel in the fourth quarter of next year, a 19.4% increase from the EIA's prior forecast.
This will drive up prices for consumers, relative to where they would have been before OPEC's latest moves.
The EIA said retail gasoline prices are now expected to average $3.38 a gallon in the third quarter of next year and $3.21 a gallon for the fourth quarter, up by 7.3% and 10.2%, respectively.
Still, gas prices are expected to stay much lower than last summer, when the national average for regular gas spiked above $5 a gallon for the first time ever.
