Global oil markets set to tighten in 2024 – ING

Escalating supply-side risks in the oil market will support Brent’s price gains through the remainder of this year, ING Global Market Research forecasted in its latest market outlook.

PHOTO: Oil pump jacks. Getty Images

Global oil markets will shift from a “surplus environment” in the second and third quarters of this year, to a “deficit environment”, due to the impending risks to oil supply, the report stated.

The rollover of OPEC+ supply cuts until June-end, coupled with disruptions to oil flows due to recent Ukrainian drone attacks on Russian energy facilities and the ongoing insurgency in the Red Sea, have helped Brent futures break above $85/bbl recently, according to ING analysis.

These upside risks are likely to lead to a supply deficit of a little over 1 million b/d in the second quarter, the report highlighted. As a result, the bank has revised its Brent’s price forecast by $7/bbl, to $87/bbl for the second quarter of this year. It expects the benchmark to average $86/bbl this year, $4/bbl higher than its previous projection.

“While a rollover of some of the OPEC+ voluntary cuts was expected, the fact that the full 2.2m b/d [2.2 million b/d] of cuts was rolled over into the second quarter of 2024 leaves the oil market in a deeper-than-expected deficit over this period,” Warren Patterson, head of commodities strategy at ING said.

Ukraine strikes disrupt Russian refining capacity

The increasing number of attacks by Ukraine on Russian oil infrastructures in recent weeks, with at least nine refineries under attack, has sent about 600,000 b/d of refining capacity offline, the report estimated.

“Oil prices have been supported by these disruptions,” Patterson said. “If domestic producers also struggle to export larger volumes, they will likely be forced to reduce oil output,” he added.

Earlier this week, JP Morgan also predicted that the attacks on Russian refineries could add a risk premium of $4/bbl to the current price of Brent crude, Bloomberg reported.

By Aparupa Mazumder 

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