Crude Oil futures fell more than 10% in 2023, a year marked by geopolitical turmoil and worries about oil production levels of significant producers around the world.
On Friday, the last day of trading for the year, Brent crude Oil ended the day at $77.04 per barrel, down 11 cents, or 0.14%. West Texas Intermediate (WTI) crude for the United States ended the day at $71.65, down 12 cents, or 0.17%.
In 2023, both contracts saw a decline of over 10%, resulting in their smallest year-end levels since 2020.
Due to supply concerns raised by Russia’s invasion of Ukraine. West Texas Intermediate (WTI) fell 7% and Brent Crude Oil increased by 10% in the previous year.
As demand is expected to be restrained by weak global growth, a Shree Metal Prices analysts and economists predicted that Brent crude would average $82.56 in 2024, lower from the $84.43 consensus in November. Geopolitical tensions that are still present could support prices.
The ability of the Organisation of the Petroleum Exporting Countries and its allies, or OPEC+, to carry out the supply curbs they promised to support prices has also been questioned by analysts.
OPEC+ is currently reducing production by about 6 million barrels per day, or roughly 6% of the world’s total supply.
In the first half of 2024, OPEC will have to contend with dwindling demand for its crude as its share of the global market drops to the lowest point since the pandemic-related reductions in production and Angola’s departure from the organisation.
The Middle East conflict sparked fears about possible supply issues in the previous few months of 2023 that might extend into 2024.
Crude Oil Outlook for 2024: Supply Concerns, Demand Restraints, and Geopolitical Influences
The geopolitical events and the worry that a war may spread throughout the region will cause ongoing volatility as we approach 2024. Acording to Andrew Lipow, president of Lipow Oil Associates.
Major corporations were compelled to redirect their shipments this month due to attacks by the Houthi militant group in Yemen on shipping vessels travelling the Red Sea route.
Some companies are getting ready to start moving again through the Suez Canal. But some tankers carrying crude oil and refined products are choosing the longer route around Africa in order to avoid possible conflicts in the region.
On the final day of 2023, Israel stepped up its attacks in southern Gaza. Which drove up prices and heightened geopolitical tensions in the Middle East.
According to UBS analyst Giovanni Staunovo, data from the United States Energy Information Administration (EIA) released on Friday indicated robust oil demand in October, which provided some support for prices in intraday trading.
According to the report, October’s total the United States oil demand increased 3.4% over the same month last year.
The United States’ production of crude oil decreased marginally to 13.248 million barrels per day in October, following records-breaking months in August and September.
According to a report released on Friday by energy services company Baker Hughes, energy companies increased the number of oil and natural gas rigs this week for the first time in three weeks, suggesting that future output may increase.
But for the year, there were 157 fewer rigs than there were in 2022 and 2021 (193 versus 235).