2024 will bring persistent concerns among oil investors about oversupply, slowing global development, and simmering tensions in the Middle East that could lead to price instability.
This year, benchmark Brent averaged over $80 per barrel, following a wild 2022 when prices shot over $100 due to disruptions in Russian supplies during the conflict in Ukraine.
This year, increased non-OPEC output and a strong dollar have kept prices in check even though demand has reached an all-time high of almost 100 million barrels per day (bpd).
According to a Reuters poll of thirty analysts and economists, Brent crude will average $84.43 a barrel in 2024.
These projections are made in spite of widely divergent demand growth estimates, which range from 1.25 million barrels per day (as projected by the Organization of the Petroleum Exporting Countries) to 1 million barrels per day (as projected by the International Energy Agency).
According to consultancies Rystad Energy, J.P. Morgan, Kpler, and Wood Mackenzie, supply is predicted to increase by 1.2 million to 1.9 million bpd in 2024, primarily due to non-OPEC producers.
“We anticipate an oversupplied market each quarter in 2019,” Macquarie global energy strategist Vikas Dwivedi stated.
Investors are closely watching supply figures for the first quarter to see if OPEC and its allies—known as OPEC+—carried out the agreed-upon joint voluntary output cuts of 2.2 million barrels per day.
According to ANZ, if the group complies, there might be a little shortfall of less than 500,000 bpd.
“The first quarter will be key because we can assess adherence to the OPEC+ voluntary supply cuts,” stated Ann-Louise Hittle of Woodmac.
She also stated that OPEC+ will not be required to continue the new voluntary cutbacks past the first quarter because of Woodmac’s current demand projection.
Energy Aspects anticipates that Saudi Arabia will reduce its cut during the second quarter after making clear that it will restore supplies gradually. However, it also stated that this did not exclude it from extending the restrictions in full again if necessary.
Global markets are once again seeing Venezuelan oil after Washington lifted its six-month sanctions on the OPEC member in April.
As long as President Nicolas Maduro’s administration follows an electoral path agreed upon with the opposition for a presidential election, another six-month extension is probably in the works, according to JP Morgan analysts.
“Late 2024 presidential elections in both countries would determine the longer-term fate of U.S. sanctions and Venezuelan oil production,” they stated.
As sanctions against the state-owned oil giant PDVSA are lifted, JP Morgan projects that Venezuela’s oil output would rise from 760,000 barrels per day in 2023 to 880,000 barrels per day in 2024 and 963,000 barrels per day in 2025.
The market for competing grades like Canada’s Cold Lake and Iraq’s Basrah Heavy may decline if Venezuela begins supplying heavy oil to the US and India, according to traders.
As more Venezuelan oil is processed by Gulf Coast refiners, more US crude may be available for export to Asia, they added.
Analysts predict that despite sanctions, Iranian and Russian oil will continue to flow to international markets, keeping pump prices low before the US elections.
Iran wants to increase its petroleum production from 3.4 million bpd to 3.6 million bpd by March 2024.
While China and India are expected to continue depending on supplies from Russia and Iran, the United States and India may go to Venezuela for more heavy crude, analysts said.
According to Kpler analyst Viktor Katona, “India is arguably in the best position… so the relative profitability of Indian operations will improve even further.”
