Oil markets move by supply and demand standards, political and economic events, market sentiment
The global oil market is expected to face some serious headwinds and challenges in 2024 such as slowing demand growth and increased U.S. recession prospects, geopolitical tensions, and potential supply disruptions.
The Organization of the Petroleum Exporting Countries (OPEC) has agreed to extend crude production cuts until the end of 2024, which is supposed to support prices and reduce the risk of supply abundance.
Despite this, the U.S. Energy Information Administration lowered its 2024 Brent crude price forecast to $80 per barrel from $85 per barrel in June 2023. The EIA expects WTI to average $75 a barrel in 2024, down from $77 a barrel.
China and India are expected to lead global oil demand growth in 2024, recovering from a slowdown caused by the epidemic and pursuing their economic development goals. However, demand growth in China may be slowed by environmental policies and structural shifts towards clean energy sources. Demand growth in India could be affected by political instability and social unrest.
Geopolitical tensions remain high in many regions, which may pose risks to oil security and stability. Some key points of tension include:
The war in Ukraine between Russia and NATO allies could escalate into a wider conflict involving nuclear or other conventional weapons.
The cross-strait crisis over Taiwan between China and the United States could lead to a military confrontation or diplomatic breakdown over Taiwan's status.
What is important is the war in Gaza and its repercussions if it widens the war cycle, especially with the Houthi intervention in Yemen and its interception of any naval vessels owned or bound for the Zionist entity at the Bab al-Mandab Strait and the United States' attempt to ally to repel these attacks from Yemen, which could lead to further escalation in the event of further conflict.
