Citi Research has revised down its Brent oil price forecasts for 2024 and 2025 due to concerns about oversupply. The 2024 forecast was lowered by $1 to $74 per barrel, while the 2025 prediction saw a significant cut of $10 to $60 per barrel, according to Reuters.
Despite these downward adjustments, Citi highlighted that tensions in the Middle East, such as recent air and sea strikes on Houthi military targets in Yemen, could lead to near-term upside in the risk premium for oil prices.
The recent surge in oil prices, with Brent crude trading around $80 a barrel, was triggered by geopolitical events.
The Organization of the Petroleum Exporting Countries and allies (OPEC+) had previously agreed to voluntary output cuts, but concerns about oversupply persist.
A Reuters poll suggests that oil prices are likely to remain near $80 a barrel in 2024, with weak global growth limiting demand.
While oversupply concerns remain, geopolitical tensions are seen as factors that could support oil prices. Citi cautioned about a potential significant surplus in 2025, even if OPEC+ maintains cuts until the end of that year.
Barclays also recently adjusted its Brent crude price forecast for the current year, lowering it by $8 to $85 per barrel but noting that oil appears undervalued.
The outlook for oil prices remains influenced by a complex interplay of supply and demand dynamics, geopolitical developments, and global economic factors.