RIYADH: Crude prices are projected to average between $75 and $85 per barrel in 2024, according to Al Rajhi Capital.
The financial services firm stated in its latest report that the oil market will remain stable throughout the year, thanks to the proactive stance of the Organization of the Petroleum Exporting Countries.
However, Al Rajhi Capital noted the possibility of an upside in prices due to demand growth. “Owing to uncertainties surrounding the rate of growth in supply, there exists room for potential upside in oil prices,” it added.
The report further pointed out that oil market stability is expected to improve this year, with the inventories of 38 countries in the Organization for Economic Co-operation and Development remaining steady around January 2023 levels.
“This resilience can largely be ascertained to the disciplined implementation of the voluntary output cut by OPEC and its allies, known as OPEC+. Furthermore, it is worth noting that although OECD inventory levels have not declined in 2023 yet they are steady around pre-covid levels,” added Al Rajhi Capital.
In April 2023, OPEC+ decided to reduce oil output by 1.2 million barrels per day. In these recommended cuts, Saudi Arabia pledged to reduce its output by 500,000 bpd, a commitment extended until December 2024.
In June, the Kingdom implemented an additional output cut of 1 million bpd, which continued until December 2023.
According to Al Rajhi Capital, global oil consumption gradually increased to 101.08 million bpd in 2023, compared to 99.16 million bpd in 2022.
The report highlighted a rise in non-oil OPEC supply in 2023, primarily driven by incremental output from countries such as the US, Canada, and other non-OECD nations.
“Given the connection between supply and healthy breakeven levels, 2024 will be a pivotal year in determining the non-OPEC oil supply,” it added.
On Jan. 17, OPEC, in its monthly report, stated that there will be a robust rise in oil demand in 2024 and 2025, driven by demand in China and the Middle East.
The crude producers’ group added that global oil demand is expected to rise by 2.25 million bpd and 1.85 million bpd in 2024 and 2025, respectively.
