A recent poll of 40 economists and analysts suggests that the ongoing conflicts in the Middle East are unlikely to significantly impact oil markets this year, as abundant global supplies continue to exert pressure on prices, hovering around the current level of $80 a barrel.
The survey forecasts an average price of $81.13 per barrel for Brent crude in 2024, slightly lower than the $81.44 consensus recorded in January. Projections for U.S. crude have also been revised down to $76.54 per barrel from $77.26 last month.
Despite recent incidents such as attacks on shipping in the Red Sea by Yemen’s Houthis, experts like John Paisie from Stratas Advisors believe that alternative routes and ample oil supplies will mitigate any substantial disruptions to oil shipments. Factors such as supply and demand dynamics are expected to play a more significant role as the market progresses into the second and third quarters of the year.
Wall Street bank Goldman Sachs anticipates a peak price of $87 per barrel for Brent crude during the summer, citing a modest geopolitical risk premium and relatively unaffected crude production. Florian Grunberger, a senior analyst at Kpler, highlighted that high spare capacity levels will continue to influence market sentiment in the coming months.
OPEC and its allies, collectively known as OPEC+, have the capability to increase oil production due to previous decisions to limit output. The group implemented voluntary output cuts of around 2.2 million barrels per day for the first quarter, with a decision expected in March on whether to extend these measures to support prices.
With OPEC’s spare capacity estimated at 5.1 million barrels per day, including 3.2 million barrels held by Saudi Arabia, discussions around potential production increases are gaining traction within the organization.
Analysts like William Weatherburn from Capital Economics point to OPEC’s optimistic forecasts for oil demand as a potential justification for a slight output increase in the second quarter. Forecasts indicate global oil demand growth ranging between 1 million and 1.5 million barrels per day in 2024, underscoring the complex interplay of supply, demand, and geopolitical factors shaping the oil market landscape.