In a recent Reuters poll conducted on Friday, analysts anticipate that international oil prices are likely to remain close to $80 a barrel throughout 2024. The projections suggest that weak global economic growth will limit demand, while geopolitical tensions may offer some support.
Analysts are uncertain about the sustainability of supply cuts by the Organization of the Petroleum Exporting Countries and allies (OPEC+), questioning their ability to uphold these measures to bolster the market.
The global benchmark, Brent crude, has maintained an average of approximately $82.17 a barrel this year, facing a yearly decline of over 9% due to factors such as a robust U.S. dollar, driven by a high-interest rate environment, and subdued demand from China, according to Reuters.
A survey involving 34 economists and analysts predicts that Brent crude will average $82.56 in 2024, a slight decrease from the consensus of $84.43 recorded in November. Only one contributor expects prices to surpass the $90 mark next year.
The forecast for U.S. crude indicates an average of $78.84 in the coming year, down from $80.50 reported last month. Analyst Thomas Wybierek from NORD Landbk expressed skepticism about significant demand growth in the months ahead.
Regarding the supply side, doubts persist about the OPEC+ alliance’s capacity to implement the agreed-upon supply reductions. In the prior month, OPEC+ oil producers consented to voluntary output cuts of around 2.2 million barrels per day for the early part of the next year, led by Saudi Arabia maintaining its current voluntary cut to support the market.
OPEC+ is currently reducing output by approximately 6 million barrels per day, with its market share dropping to 27%. Despite challenges in maintaining cooperation within the group, all members are reportedly supportive of higher oil prices, according to John Paisie, president of Stratas Advisors.
Analysts also pointed out that geopolitical risks would likely contribute to oil price volatility in the coming months. Concerns were raised about potential geopolitical tensions in 2024, with an anticipated higher associated risk premium. Recent military clashes between Israel and Hamas have heightened worries about broader conflicts impacting oil supply from the Middle East, the world’s primary oil-supplying region. Additionally, recent ship attacks in the Red Sea have raised fears of potential disruptions to shipping.