EIA expects OPEC+ to slash oil production by another 300,000 b/d in 2024
The US Energy Information Administration (EIA) forecasted the annual Brent spot price to average about $95/bbl in 2024, indicating an upward revision of $7/bbl from its September outlook.
PHOTO: Oil pumpjacks during sunset. Getty Images
In its October short-term energy outlook report, the US energy agency estimated global oil inventories to fall by 200,000 b/d in the second half of 2023. This reduction is attributed to the efforts of OPEC+ nations' bid to continue cutting down on oil supply in order to maintain global oil production below global oil consumption levels.
The agency expects the [ten] core member countries of OPEC and their ally nations to continue to honour their production cut pledges.
As a result, global crude inventories will be tight in the first quarter of 2024, the EIA said in its flagship report. "We expect OPEC+ members will decrease their crude oil production by 0.3 million b/d [300,000 b/d] in 2024 compared with this year," it further added.
The EIA has also raised concerns about potential oil supply disruptions and higher oil prices in 2023 due to the recent conflict between Israel and Palestine’s militant group Hamas. However, “the situation in Israel began developing after we ran our models, so it remains a source of uncertainty in our forecasts,” EIA said.
According to EIA estimates, the global crude oil inventories are projected to balance out between the second and fourth quarters of 2024. This is attributed to a combination of factors, including a slowdown in oil consumption growth and increased production.
PHOTO: Global crude oil production growth in 2024. EIA estimates
Supply and demand outlook
Global liquid fuels production, which includes crude oil and other liquids, will grow by 1.3 million b/d in 2023 and by 900,000 million b/d in 2024, according to the EIA report.
The agency estimates OPEC+ crude oil production to average 38.2 million b/d in 2023, “about 1.4 million b/d less than in 2022.” OPEC+’s total production is further estimated to fall to 37.8 million b/d in 2024.
Non-OPEC production growth, driven by new projects in the US and Canada, is expected to increase production by 2.2 million b/d in 2023, the EIA said.
“The rate at which U.S. [US] tight oil producers add drilling rigs and improve well-level efficiency is highly uncertain and could cause global oil production to vary significantly from our forecast,” the EIA said.
Non-OPEC production will grow by another 1 million b/d in 2024 as new projects in Guyana and Brazil will add to global supply, EIA further added.
Meanwhile, due to the uncertain global economic outlook and “unexpected changes in GDP growth,” the EIA expects global oil demand in the coming months to remain in limbo.
By Aparupa Mazumder
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