A pumpjack draws out oil from a well head near Calgary, Alta., Saturday, Sept. 17, 2022. Deloitte says energy prices will likely be volatile in the first quarter of 2023 as geopolitical uncertainty continues. The firm’s energy, oil and gas price forecast released Monday said tension between supply and demand will continue throughout the winter. THE CANADIAN PRESS/Jeff McIntosh

Energy price volatility to continue in 2023 amid geopolitical uncertainty: Deloitte

Deloitte says energy prices will likely be volatile in the first quarter of 2023 as geopolitical uncertainty continues.

The firm’s energy, oil and gas price forecast released Monday says global factors including the war in Ukraine and China’s rocky COVID reopening will continue to contribute to tension between supply and demand.

After breaching the US$100 mark for the first time in close to a decade earlier in 2022, crude oil prices slid in the back half of the year as interest rates rose, then rallied briefly as China started moving away from its zero-COVID policy.

Other major factors for oil prices have included OPEC-plus production cuts and moves to cap the price of Russian crude which Deloitte says could lead to disturbances in global supply, while natural gas prices have been influenced by regional weather forces and storage levels, especially in Europe.

Report author Andrew Botterill says although a windfall from higher energy prices would normally lead companies to increase their budgets and invest in larger projects, in 2023 companies will likely be bent on shoring up balance sheets and bracing themselves for continued volatility.

He says that means companies may focus more on piloting and policy development this year before making multibillion-dollar investments in longer-term projects.

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