Oil price expected to stay near $80 on slow demand

A poll conducted by Reuters, on Friday, indicated that international oil prices are expected to remain around $80 per barrel in 2024, with analysts predicting that weak global growth would limit demand and geopolitical concerns might trigger price support.

Analysts questioned if supply reductions by the Organization of the Petroleum Exporting Countries and their allies, OPEC+, would be able to maintain market stability.

This year, the global benchmark Brent crude price has averaged about $82.17 per barrel, and it was expected to fall by more than 9% annually owing to a combination of the strong currency, which was supported by high interest rates, and the slowdown in demand from China, the world’s largest consumer.

34 economists and experts surveyed predicted that Brent crude will average $82.56 in 2024, down from the consensus of $84.43 in November. Only one participant anticipated that costs will average more than $90 in the upcoming year.

US crude was seen averaging $78.84 next year, from $80.50 last month. At the time of writing WTI crude is trading at $72.06 per barrel. Brent crude oil is trading at $77.35 per barrel.

In the upcoming months, we do not anticipate significant demand-side acceleration. The supply side is currently under investigation. Many questions now are around whether OPEC+ will be able to carry out the previously announced output reduction.

In order to maintain the market, OPEC+ oil producers decided last month to extend their current voluntary output cut by Saudi Arabia, amounting to roughly 2.2 million barrels per day for the first part of 2019.

OPEC+’s output is being reduced by almost 6 million barrels per day, and its market share has dropped to 27%.

All OPEC+ members are in favour of higher oil prices, despite the fact that maintaining collaboration with them at this particular time and price point is challenging.

Geopolitical uncertainties, according to analysts surveyed, will also keep oil prices volatile in the upcoming months.

According to analysts, geopolitical concerns will be more pressing in 2024 than they were in 2023, and there will be a significant increase in the risk premium that goes along with it.

Fears that a bigger battle could disrupt supplies from the Middle East, the world’s largest oil-supplying region, were raised by military skirmishes in the region. There are concerns that the recent ship attacks in the Red Sea may cause disruptions to shipping.