– 2024 is a fateful year for the oil market – E24

– 2024 is a fateful year for the oil market – E24

Analysts believe that whether OPEC succeeds or not will be the big question for oil prices next year.


In 2023, oil prices remain mostly in the 70s and 80s in dollars per barrel.

OPEC+ production cuts, led by Saudi Arabia, were pivotal in the oil market last year. Geopolitical turmoil, most recently with conflict in the Middle East this fall, has contributed to volatility.

The oil market is also closely following developments in the global economy, including demand from China, and uncertainty about a potential recession.

Oil analysts believe that when looking to 2024, these factors will remain important.

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The big question for 2024 is whether OPEC will be able to force the oil market into a supply deficit through approved production cuts, or whether it will be pressured into deeper cuts to defend the oil price, says Helgi Andre Martinsen, oil analyst at DNB Markets. .

– If OPEC does not succeed in 2024, this may lead to a change in strategy from focusing on price to focusing on volume. In this regard, 2024 is a fateful year for the oil market.

Helgi Andre Martinsen, oil analyst at DNB Markets

Flatness “gives strength to OPEC”

OPEC member states announced production cuts several times last year to keep oil prices high.

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The oil cartel, in which Saudi Arabia plays an important role, consists of a number of oil-producing countries primarily in the Middle East and Africa. The expanded version of the OPEC+ group also includes Russia.

Saudi Arabia and Russia were among the countries that announced they would extend their voluntary cuts after the OPEC meeting at the end of November.

OPEC+ reduces what is necessary for the price of oil by $80 per barrel or more, Schildrup is thinking about 2024.

Saudi Energy Minister Prince Abdulaziz bin Salman Al Saud is on his way to attend the OPEC summit in Vienna this summer.

He and Martinsen at DNB highlight US shale oil production as a factor to watch. Martinsen believes that the situation “will stabilize in the first half of the year,” and will provide support for higher oil prices. Schildrup believes that production will go “almost sideways” in 2024.

The SEB analyst believes this gives OPEC+ the power to direct the oil market where they want.

I think at the top near $100

The price of oil (the burnt spot) remained above $70 per barrel throughout 2023. It reached its highest levels in September, exceeding $95, before declining during November and the beginning of December.

At the end of the year, the price of oil is $77 per barrel, down more than 10 percent since the end of 2022.

Both Martinsen of DNB Markets and Bjarne Schildrup, commodity analyst at SEB, believe the price will continue in roughly the same range until 2024.

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Schildrup expects the price of Brent crude to average $85 per barrel. He envisions the high to be $100 and the low to be $65. Martinsen and DNB Markets believe that the oil price will remain in the range of $70-95 per barrel until 2024.

-We believe that the weakest period for oil prices will be at the beginning of 2024, which is characterized by a fairly weak balance in the oil market, but partly supported by high geopolitical risks in the Middle East, says Martensen at DNB Markets.

After that, the analyst believes we will see higher prices for the rest of the year, due in part to declining “non-OPEC production growth momentum” and flat U.S. shale oil production.

-It is still a very turbulent world

Geopolitical turmoil has characterized the oil market throughout 2023, although volatility and price peaks have not been as strong as they were in the early part of the Ukraine war in 2022.

The Middle East was a focus of unrest throughout the fall. The Hamas attack on Israel in October and the subsequent war in Gaza led to a short-lived recovery, but it was not permanent. The same can be said, at least so far, about attacks on ships in the Red Sea in recent weeks.

Bjarne Schildrup is Chief Raw Materials Strategist at SEB

Bjarne Schildrup believes that geopolitical turmoil will cause prices to rise in 2024 as well.

The world remains very turbulent, with friction and major or minor disruptions in oil supplies from time to time, he expects.

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– Economic acceleration wins in the end

When it comes to what demand will look like, Martensen believes that “global oil demand growth will slow sharply in 2024.”

For his part, Schildrup expects demand to “surprise the upside.” Among other things, he points to pent-up demand in the wake of the Corona pandemic, and sees demand increasing by more than 1.3 million barrels per day compared to the previous year.

Saudi Arabia is central to the OPEC oil group.  Here from one of the facilities of the state oil company Saudi Aramco.

By comparison, the International Energy Agency estimates that global oil demand will increase by 1.1 million barrels per day next year, according to the organization's latest oil market report. This is less than estimates of 2.3 million barrels per day this year.

OPEC believes it will better adhere to its December report which said demand would increase by 2.2 million barrels per day in 2024.

High price growth and sharp interest rate increases in the wake of the coronavirus pandemic have characterized the economy in recent years.

Economists have debated whether this would lead to a sharp decline and recession in the global economy, or whether a “soft landing” could be achieved where price growth declines without there being any sudden economic stop.

– The acceleration of the global economy wins in the end. The price of oil fluctuates between “stagnation” and “acceleration,” but inflation disappears like dew before the sun, and “acceleration” wins in the end, as Schildrup sees it.

Dalila Awolowo

Dalila Awolowo

"Explorer. Unapologetic entrepreneur. Alcohol fanatic. Certified writer. Wannabe tv evangelist. Twitter fanatic. Student. Web scholar. Travel buff."

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