Page 5 - Policy Economic Report - February 2023

Policy and Economic Report:
Oil & Gas Market

Nearly a year on from Russia’s Ukraine war, global oil markets have started trading in relative calm
manner. Oil prices are coming back to pre-war levels with exception from some petroleum products,
though even these have drifted much lower from last summer’s historical highs. World oil supply looks
set to exceed demand in the first half of 2023, however the balance could quickly shift to deficit as demand
recovers and some Russian output is shut in.

Russian oil production and exports have held up relatively well despite sanctions and has managed to
reroute shipments of crude oil to Asia and the G7 price cap on crude appears to be helping to keep the
barrels flowing.

Natural gas spot prices at the U.S. Henry Hub benchmark averaged $3.27 per million British thermal units
(MMBtu) in January 2023 as compared to $5.53 per million British thermal units (MMBtu) in December
2022. Natural gas prices started to decrease as temperature was moderate in the U.S., which greatly
reduced the demand for natural gas.

Economy in Focus

1. A snapshot of the global economy

Global economic growth
• According to United Nations, global economy is projected to grow by 1.9 % in 2023, lower than
the 3 % growth in 2022 and projected to pick up to 2.7 % in 2024.

• Although the lifting of COVID-19-related restrictions in most countries in 2022 supported
domestic demand recovery, the world has seen rising inflation, weakened household and business
spending, and slow trade growth as the key factors affecting global financial conditions.

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