Predicting the changing price of oil is a notoriously difficult task, however, recent analysis by Bloomberg Intelligence forecasts that Brent is expected to be above $80 a barrel at the end of 2024.
According to the respondents of the group’s February oil-price survey Brent will be trading at the price OPEC+ seems to be targeting as a floor, 53% of respondents indicated.
Only 5% of those responding to Bloomberg Intelligence’s questions see prices surpassing $100.
Salih Yilmaz, senior industry analyst for energy at Bloomberg Intelligence, said: “According to our findings, geopolitical developments have been one of the key drivers of crude in the past few months though only 10% of the respondents think this will be the biggest driver of oil prices over the next two years.”
There was disagreement amongst those survived as to what the biggest driver will be for oil prices over the next two years.
OPEC+ policy was the answer of 27% while a further 27% said it will be reliant on China’s demand. 22% believed it would be the non-OPEC+ supply growth, and another 14% thought it would be the Fed policy and interest rate outlook.
Mr Yilmaz added: “The turmoil in the Red Sea and the Israel-Hamas conflict has arguably had a limited effect on prices, given there hasn’t been any substantial disruption to oil flows, and OPEC+ has a meaningful amount of spare capacity.
“However, the Middle East tensions and the geopolitical risk premium may be slowly starting to become more baked into oil prices.
“That’s after they were outweighed by weak economic prospects and a bleak demand picture in the past few months, as Brent oil price tests $85 a barrel.”
Just shy of a quarter of those answering expect peak oil demand before 2030, a considerable downgrade from the 50% that forecast this in 2022.
The majority, 69%, forecast demand for crude peaking by 2035, a drop of compared to the more than 80% of respondents in the 2022 poll.
In addition to this, almost all of the respondents said there is a less than $5-a-barrel geopolitical risk premium attached to oil prices by the market currently, despite several high-profile disputes and tensions.
Yilmaz continued: “The addition to OPEC of Russia and other oil-producing states has created a larger bloc, enabling more output to be monitored and managed.
“The group’s agility has helped it become effective in responding to market moves. With a monitoring committee overseeing output more closely, OPEC+ is also arguably better positioned to manage the supply-demand balance.”
Late last year Russia forecast the price of its oil to average between $80 and $85 a barrel in 2024. Current Brent prices are at just over $84 per barrel.
The Russian outlook was based on several analysts’ estimates and shaped forecasts for the nation’s social and economic development.
Yilmaz concluded: “Global demand growth was underwhelming last year, driven by a softening outlook in China amid rising unemployment and turmoil in its property sector.
“Even so, demand is still expected to reach another record this year, helped by further recovery in jet-fuel consumption – about 8% of the pre-pandemic total.”
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