OPEC+ production cuts will keep Brent prices above $80/bbl next year - EIA
The US Energy Information Administration (EIA) forecasted the annual Brent spot price to average about $83/bbl in 2024, indicating a downward revision of $10/bbl from its November outlook.
PHOTO: Black oil pump jacks in the desert of Bahrain, Middle East. Getty Images
In its December short-term energy outlook report, the US energy agency estimated OPEC+ crude oil production to decline by an additional 600,000 b/d on average in 2024. The forecast is based on the assumption that OPEC+ countries, including Saudi Arabia, will continue to stick to voluntary oil production cuts through 2024.
The agency expects the [ten] core member countries of OPEC and their ally nations to continue to honour their production cut pledges in 2024. “Overall production from OPEC+ countries will remain below targets,” the EIA added.
As a result, EIA expects Brent crude oil spot price to “increase from an average of $78/bbl in December [2023] to an average of $84/bbl in the first half of 2024, partly driven by recently announced OPEC+ production cuts,” the energy agency said.
The US agency projects an increase of 800,000 b/d in global oil inventories during the first quarter of 2024 due to rising non-OPEC production. “The potential for OPEC+ production to increase after the voluntary cuts expire in 1Q24 [first quarter of 2024] creates some downside risk for our expected oil prices,” it further added in its Short-Term Energy Outlook (STEO).
Supply and demand outlook
Global liquid fuels demand is expected to increase by 1.3 million b/d in 2024, the EIA stated. Most of the expected growth in liquid fuels demand comes from non-OECD regions in Asia, led by China and India, the EIA added.
The energy agency also expects net exports of US crude oil and petroleum products to increase by 200,000 b/d to 2 million b/d in 2024, up from around 1.8 million b/d in 2023. “This growth is primarily driven by an increase in U.S. crude oil and hydrocarbon gas liquids production,” the EIA said.
Meanwhile, due to the uncertain global economic outlook, the EIA expects global oil demand in the coming months to remain in limbo.
By Aparupa Mazumder
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