Oil prices likely to be above $80 in 2024: Survey
Global oil demand expected to reach a record in 2024, helped by a recovery in jet-fuel consumption
London – Brent oil is expected to be above $80 a barrel at the end of 2024, the price OPEC+ seems to be targeting as a floor, according to the majority (53%) of respondents to Bloomberg Intelligence's (BI) February oilprice survey, with only 5% seeing prices surpassing $100.
Just a quarter (24%) of respondents expect peak oil demand before 2030 - compared with almost 50% in BI’S 2022 oil survey – as sentiment shifts around the resilience of demand and the outlook for continued consumption growth. In addition, a significant majority of respondents (92%) said there is a less than a $5-a-barrel geopolitical risk premium attached to oil prices by the market currently, despite several high-profile disputes and tensions.
In a press release, Salih Yilmaz, Senior Industry Analyst - Energy at Bloomberg Intelligence, said, “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.”
BI’S survey shows that there is a wide disparity of opinion around what the biggest driver will be for oil prices over the next two years. Over a quarter of respondents (27%) said it will be
OPEC+ policy, while another 27% said it'll be the China demand story. Some 22% believe it will be the NON-OPEC+ supply growth, and another 14% think it'll be the Fed policy and interest rate outlook.
Yilmaz added, “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.”
More than half (55%) of those polled think the OPEC+ alliance will still be in place in 2025, as its intervention in the market during the pandemic was deemed successful overall, noted BI. This compares with 76% in its 2023 survey, however, showing confidence in the group's unity has fallen as there's still some tension among some members amid the continued need for the output cuts.
Yilmaz added, “The addition to OPEC of Russia and other oilproducing 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.”
Demand outlook
BI’S latest survey has shown a shift in sentiment over the resilience of demand and the outlook for continued consumption growth, with only 24% of the respondents expecting peak oil demand before 2030 – compared with almost 50% in the 2022 survey. More than a third (69%) see demand for crude peaking by 2035 vs. more than 80% of respondents in the 2022 poll.
Global demand is forecast to be between 102mn-103mn bpd on average in 2024 (vs. 101.8mn bpd in 2023), according to 51% of respondents, while only 18% see it above 103mn bpd.
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 jetfuel consumption - about 8% of the pre-pandemic total.”