Oil price forecasts in 2024 are subject to periodic updates by the relevant international and regional institutions depending on market conditions and estimates of supply and demand, which are witnessing a state of fluctuations.
A recent report, seen by the Energy Research Unit, expected an increase in the average price of Brent crude during the years 2023 and 2024, with the continued supply deficit, as a result of the OPEC+ alliance cuts and high demand.
The base case scenario in the annual report issued by the African Energy Chamber – a non-profit organization based in Johannesburg – suggested that the average price of Brent crude would rise to $84 per barrel during the third quarter of 2023, and $87 per barrel during the fourth quarter.
The report also expected the average oil price in 2024 to reach $86 per barrel, compared to the expected average for 2023 at $83.50, with strong estimates of demand that may weaken market balances.
The African Energy Chamber had expected in a report last year (2022) that average oil prices in 2024 would reach $79 per barrel. Which means it raised its estimates by about $7 per barrel.
Oil price movement since June
Global crude prices witnessed a strong upward trend that began in late June and extended until the end of October 2023, as prices moved sharply from $72 per barrel, to exceed $90, before calming down and returning around $80 levels again in the first week of November.
The increase in oil price estimates in 2024 was driven by a large supply deficit in the market, due to additional voluntary production cuts in Saudi Arabia, in addition to cuts by the OPEC+ alliance.
Global oil inventories also witnessed a significant decline last July, equivalent to 1.22 million barrels per day, in addition to a series of weekly declines witnessed in US oil inventories during the month of August 2023. This contributed to stimulating upward pressure on prices.
The weak macroeconomic data coming from China during the month of September affected oil prices and added a state of pessimism, according to what was monitored by the Energy Research Unit.
Platform for oil and gas exploration
However, these data could not curb expectations of a rise in oil prices in 2024, even if they made them cautious, as extending the voluntary production cuts in Saudi Arabia and Russia was able to balance market sentiment and mitigate the impact of the Chinese data, according to the African Energy Chamber report.
Saudi Arabia extended the additional voluntary reduction of one million barrels per day until the end of December 2023, and Russia continues to voluntarily reduce its oil exports by about 300,000 barrels per day until the end of this year.
Oil demand forecasts
The African Energy Chamber report does not expect upward pressures on oil prices to decline until the end of this year (2023). Rather, it is likely that the state of large market deficits and depleted stocks, with limited supply and high demand, will continue until the entire year 2024.
Based on this, the report suggests that global demand will exceed supply by more than 2.2 million barrels per day between August and December 2023, while the deficit in 2024 is estimated at about 1.9 million barrels per day, which means that average oil prices in 2024 are likely to reach $86 per barrel.
As for crude prices in 2025, their average is expected to decline to $70 per barrel, according to detailed estimates monitored by the Energy Research Unit from the African Energy Chamber report.
Oil price developments in 8 years
Oil prices have gone through ups and downs over the past 8 years, reaching an average of $53.6 per barrel in 2015, then rising to $71.69 in 2018, while the average fell to $64.16 per barrel in 2019, falling sharply to $41.96 per barrel at the peak. Corona pandemic in 2020.
Average crude prices rose again in 2021, reaching $70.95 per barrel, before reaching its peak in the first year of the Ukrainian war, recording $99.04 per barrel, according to estimates by the African Energy Chamber.
