Oil Price Forecasts Stable Amid Geopolitical Risks

By Anushree Ashish Mukherjee and Kavya Balaraman

(Reuters) – Analysts are maintaining their oil price forecasts for the second half of 2024, as geopolitical risks counterbalance the subdued demand from major consumers like China, according to a Reuters poll conducted on Wednesday.

A survey of 36 analysts and economists indicated that Brent crude is expected to average $83.66 per barrel in 2024, while U.S. crude is projected to hover around $79.22, aligning closely with last month’s estimates of $83.93 and $79.72.

“Prices are expected to remain in the $80-85 per bbl range supported by stable demand-supply dynamics,” stated analysts from CRISIL Market Intelligence and Analytics. They noted that slower demand in Europe, combined with improvements in OPEC+ supply, will help stabilize prices.

So far this year, Brent crude has risen 4.6%, while West Texas Intermediate crude has increased by 7.1%.

Data recently indicated that China’s total fuel oil imports fell by 11% in the first half of the year. Norbert Rücker, a Julius Baer analyst, commented, “China’s oil demand is constrained by economic challenges and the rapid shift towards electric mobility,” while demand in Western countries is stagnating.

Analysts largely expect global oil demand to rise by 1 to 1.5 million barrels per day (mbpd) in 2024, in contrast to the International Energy Agency’s projection of just under 1 million.

While some analysts believe geopolitical risks have diminished recently, others opine that high geopolitical risk premiums are likely to persist. Matthew Sherwood, lead commodities analyst at EIU, noted, “The primary geopolitical risks are still due to the war in Gaza, concerning the potential escalation into a regional conflict or threats to shipping from Houthi strikes in the Red Sea.”

Poll participants expect OPEC+ to continue its commitment to extend production cuts of 3.66 million bpd until the end of 2025, along with phasing out additional cuts of 2.2 million bpd starting in October 2024.