By ETimes
Most public- and private-sector forecasts point to higher global oil prices in 2024. But just how much higher remains little more than an educated guess amid widespread geopolitical uncertainty.
The war in Ukraine enters its second winter with few signs of movement in what has turned into a protracted stalemate. Palpable tension persists between the U.S. and China, the world’s largest oil importer. And, the latest incarnation of the decades-long battle between Palestinians and Israelis has heightened discord throughout the oil-rich Middle East.
Fitch Ratings summed up how unexpected developments tied to the Middle East could ripple far beyond the price of oil.
“An oil price shock related to the Middle East conflict could be accompanied by tighter financial conditions, lower business and consumer confidence, and corrections in financial markets,” the rating agency stated in its year-end oil report.
Best Guesses for 2024
Fitch said a price shock boosting oil prices to US$120 per barrel next year would slice 0.4 of a percentage point off worldwide economic growth. The International Monetary Fund (IMF) currently predicts the global economy will expand 2.9% in 2024.
Most 2024 oil price forecasts, though, have coalesced in the US$90-per-barrel range.
The U.S. Energy Information Administration (EIA) predicts prices for Brent crude, the global benchmark, will average US$93 per barrel, up from an expected 2023 global average of US$84 per barrel.3 Brent crude currently trades near US$80 per barrel.4 It fell as low as US$71.84 per barrel in late June before surging as high as US$96.55 per barrel in late September as Saudi Arabia extended production cuts.
Despite the renewed turmoil in Israel that began in early October, Brent has fallen about US$10 per barrel in the past month. Still, even though the EIA expects global production will increase by 1 million barrels a day next year, most analysts expect prices will rebound from current levels.
Bank of America sees Brent prices averaging US$90 per barrel in 2024, with West Texas Intermediate (WTI) crude—the U.S. benchmark—averaging US$86 per barrel next year. Goldman Sachs predicts Brent prices will average US$94 a barrel next year.