Oil prices are predicted to hold above $80 a barrel this year, with analysts polled by Reuters revising up their 2024 forecasts for a second time on expectations that supply will lag demand amid conflict in the Middle East and as OPEC+ maintains output cuts.
A poll of 43 economists and analysts surveyed in the last two weeks forecast that Brent crude would average $84.62 a barrel in 2024, up from a $82.33 consensus projection in March. Projections for U.S. crude have also been revised higher to $80.46 a barrel from $78.09 last month.
Suvro Sarkar, energy sector team lead at DBS Bank, said, “Oil market fundamentals remain tighter than expected so far in (the first half). Demand trends have been more positive than expected, and should continue to support oil prices through inventory drawdowns, given the extended OPEC+ supply cuts.”
The International Energy Agency (IEA) forecasted an increase in global oil demand by 1.2 million barrels per day (mbpd) in 2024, and a majority of poll respondents see oil demand rising between 0.9 and 1.4 mbpd in 2024.
Analysts at the Economist Intelligence Unit see global oil demand, which is set to reach another record high on strong consumption in developing nations, along with geopolitical tensions putting a floor under oil prices at a $80/bbl level.
Most analysts noted that a $100 a barrel oil price point is unlikely despite the uncertainties and volatility in supply that surround the Middle East crisis. The OPEC+ group is expected to maintain its production cuts beyond June, which could keep the supply-demand balance in a deficit, according to most poll respondents.
While some analysts noted that U.S. production is expected to grow this year, others warned that prioritizing shareholder returns over production expansion in the U.S. shale industry could limit growth.