Oil price forecast for 2024: What’s in store for global crude?

An impending recession, a deepening slowdown in the major economies of the world, less than expected crude demand from China, and less production will be defining features for oil markets in 2024.

Firstly, let’s recap the performance of crude oil in 2023.

The oil markets in 2023 can be defined by certain characteristics. The most important of all was the prolonged production cuts by OPEC+ (the Organisation of the Petroleum Exporting Countries and its allies). Together they pump 40% of global oil supply.

In April 2023, the group announced additional cuts of 1.65 million barrels per day (mbpd), building on their previously agreed cuts of 2 mbpd from October 2022. This would correspond to about 3.66 mbpd of cuts equal to about 3% of global oil demand. Markets reacted positively to this development and oil prices rallied.

The trend gained more momentum when in June 2023 Saudi Arabia, the de-facto leader of OPEC and one of the top 3 largest oil producers in the world, decided to volunteer for additional cuts of 1 mbpd “with the aim of supporting the stability and balance of oil markets”. Oil prices peaked at $97, an increase of 25% since June 2023. Recently in November, OPEC+ also agreed to extend the cuts into the first quarter of 2024.

Apart from that, China’s economic recovery continued to thwart any sustainable and substantial oil price rally. European countries also registered an economic slowdown with oil demand in Germany falling by 90,000 bpd in 2023, according to the International Energy Agency (IEA) expectations. Furthermore, US manufacturing activity declined for 13 consecutive months.

The war in the Middle-East, meanwhile, had a muted effect on oil prices.

It is expected that we will see ample supply next year due to a