A recent Reuters poll indicates that despite escalating tensions in the Middle East, the dynamics of the global oil market are poised to keep prices in check, hovering around the current $80 per barrel mark. Surveying 40 economists and analysts, the consensus forecast for Brent crude averages $81.13 per barrel in 2024, a slight decrease from January’s $81.44 projection. U.S. crude forecasts also witnessed a minor adjustment to $76.54 a barrel.
Experts suggest that the conflicts in the Middle East, including recent Red Sea disruptions by Yemen’s Houthis, are unlikely to significantly impact oil shipments due to the availability of alternative routes. Analysts emphasize that global supply and demand fundamentals will play a more crucial role in shaping oil prices as the year progresses.
Goldman Sachs remains cautiously optimistic, forecasting a summer peak for Brent crude at $87 per barrel, citing a modest geopolitical risk premium and minimal impact on crude production. The surge in spare capacity, reaching multi-year highs, is expected to exert pressure on overall market sentiment in the coming months, according to Florian Grunberger, a senior analyst at data and analytics firm Kpler.
Key oil-producing nations within OPEC+, with substantial spare capacity, could influence market dynamics. OPEC+ had previously agreed to voluntary output cuts of approximately 2.2 million barrels per day (bpd) in the first quarter, with a decision on potential extensions anticipated in March. Saudi Arabia alone holds 3.2 million bpd of the total OPEC spare capacity estimated at 5.1 million bpd.
While production cuts have provided support to oil prices, there’s a growing inclination among OPEC+ members to increase output. Analysts speculate that forecasts for robust oil demand, coupled with a potential release of larger voluntary cuts during the summer, might influence a shift in overall sentiment.
Despite the complexities, most analysts project global oil demand to witness growth ranging from 1 million to 1.5 million bpd in 2024.
