What to Expect from 2023: Expert Predictions

The dynamics of world prices for fossils largely depend on the rigidity of the requirements of climate change policies, which aim to limit fossil fuel consumption. Concerning fossil fuels, the EU policy requirements up to 2020, as well as the current commitments that were born during the Copenhagen-Cancun meeting, are met through the introduction of carbon caps combined with the application of targeted policy measures (for example, subsidies and feed-in tariffs, energy efficiency and transport policy norms, carbon standards, etc.).

Well, we've been talking to some of our partner financial experts to get their opinions on what it's like to work at a mining company, and they've given us some insights into what they think of current and future situations.

Shania Brenson, the co-founder of 15M Finance, said: "The EU's Energy Union is a welcome step forward for Europe's energy security and climate goals." She added that this could help lower emissions by cutting down on imports from Russia and other countries with poor environmental standards.

Benjamin Doff from UnionFinance commented: "The Energy Union was definitely a good idea, but now it has to be implemented." He went on to say that there are still a lot of questions surrounding how this will work in practice.

Furthermore, the policy to stimulate the development of renewable energy sources (RES) is indirectly modeled in all regions of their existence using RES values, which leads to more intensive development of RES due to lower costs for energy consumers. The projections also include explicit assumptions about technology costs, energy taxes and subsidies (especially in developing regions), energy efficiency improvements, zero-waste technologies, and geopolitical interests (such as the role of OPEC).

Mineral prices also depend on the cost of various supply options (including unconventional resources), production capacity, limitations in production rates, and recovery rates of different types of resources.

Let's take a closer look at what 2023 will be like with expert and analyst commentary.

Oil Prices

“Underinvestment in the industry could lead to an oil shortage in the market over the next ten years,” said Christian Malek, head of global commodities strategy at JPMorgan.

The forecast for 2023 is based on the assumption that the OPEC+ countries will not be able to achieve the planned production volume, the production of shale oil in the United States will also slow down, and the demand for fossil fuels, on the contrary, will grow.

In addition, Malek pointed out that even after oil prices rose by 40% this year, the industry remains underinvested, which will also negatively affect the balance of supply and demand in the future.

Gas Prices

The International Energy Agency (IEA) has warned that Europe will face natural gas shortages in 2023 and difficulty getting even half of the fuel it needs to replenish storage.

The outlook echoes industry fears that next winter will be more complicated than this due to lower gas volumes from Russia, which was once Europe's biggest supplier. So far, record liquefied natural gas imports, lower demand, and hot autumn weather have kept inventories full and reduced the risk of shortages this winter.

While Russian gas supplies are expected to be around 60 billion cubic meters this year, in 2023, they are likely to be reduced to less than half or may cease altogether, the IEA said.

On the other hand, China's LNG demand could be rebounded to near 2021 levels as the economy reopens after COVID-related lockdowns. As a result, it could absorb more than 85% of the expected increase in global LNG supplies next year and limit the amount of fuel available to Europe.

The forecast calls for consumption this winter to fall 11% from the five-year average and the region to end this heating season with storage at about 30%.

Prices for Metals

After jumping to a record high in 2022, the metal price index will fall by more than 7% in 2023 (although it will still be 40% higher than before the pandemic). Demand for diamonds and gold will be hardest hit by the economic downturn, although China's stimulus spending will support demand for metals needed for construction and manufacturing. The Economist Intelligence Unit notes that steel used in North America will reach an eight-year high.

However, high energy prices and electricity shortages in China and Europe will hamper the production of all metals, including aluminum, steel, and zinc. It could prompt governments to extend bans on the export of scrap metal.

The transition to "green" energy and digitalization will increase the demand for copper. In addition, electric vehicles and electronics will consume lithium, nickel, and rare earth metals.