EIA: energy forecasting more uncertain amid Russian invasion of Ukraine

The U.S. Energy Information Administration (EIA) announced Tuesday (March 8) that Russia’s continued invasion of Ukraine has contributed to increased uncertainty in forecasting energy supply, consumption, prices and other trends as the United States looks to ban oil imports from Russia.

The U.S. average price of gasoline rose to a record of more than $4.10 per gallon on Monday, according to crowd-sourced fuel pricing app GasBuddy. The previous record of $4.10 was set in 2008. Also, GasBuddy expects the U.S. average diesel price to break the record of $4.84 per gallon in the next two weeks.

The EIA noted the pandemic also has contributed to increased uncertainty in its forecasting, but “this uncertainty has increased significantly following Russia’s further invasion of Ukraine.” This comes amid low oil inventories, which increases oil price volatility and contributes to high oil prices.

Following are other related factors that EIA is watching:

• Nations could choose to ban imports of Russian energy
• Additional sanctions against Russia could be announced
• Corporations could take additional actions that would affect Russia’s oil output
• Crude oil producers outside Russia could respond to higher prices by increasing production

The EIA still expects global crude oil production to rise and come into balance with demand that has increased more rapidly than production since mid-2020. Global oil production is expected to increase in 2022 to the point of beginning to restore depleted global inventories, which could contribute to some declines in crude oil prices. Even so, Russia’s invasion of Ukraine and the global response to it make the forecasts “highly uncertain,” according to the EIA.

Link here for EIA’s most recent Short-Term Energy Outlook.

On Saturday, the U.S. national average gasoline price exceeded $4 per gallon for the first time since 2008 before breaking the 2008 record on Monday, according to GasBuddy.

“Americans have never seen gasoline prices this high, nor have we seen the pace of increases so fast and furious,” said Patrick De Haan, head of petroleum analysis at GasBuddy. “That combination makes this situation all the more remarkable and intense, with crippling sanctions on Russia curbing their flow of oil, leading to the massive spike in the price of all fuels: gasoline, diesel, jet fuel and more. It’s a dire situation and won’t improve any time soon. The high prices are likely to stick around for not days or weeks, like they did in 2008, but months. GasBuddy now expects the yearly national average to rise to its highest ever recorded.”