Oil in Focus: Tensions and Expectations for 2024 Investments

Written by Paulo Nogueira

Published on 14/12/2023 at 12:20

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Oil Investors Face 2024 With Supply Glut and Demand Uncertainties, Say Reuters Economists. OPEC+, Exports, Refineries and a Strong Dollar Are Key Factors.

Investors in the oil market are preparing to face 2024 with ongoing concerns. The latent tension in the Middle East, the slowdown in economic growth, and the supply glut are the main challenges that could trigger price volatility, keeping them alert to changes in the global landscape.

The benchmark Brent index has averaged around $80 per barrel this year amid a volatile period. In 2022, prices soared above US$ 100 after Russian supply was disrupted due to the onset of the war in Ukraine, directly impacting the oil market. The current scenario remains challenging, with a strong dollar and robust production outside of OPEC, despite demand hitting a record high of over 100 million barrels per day (bpd), maintaining uncertainty in the market.

Increase in Oil Price Forecasts for 2024

A survey by Reuters with 30 forecasts from economists and analysts indicates that Brent crude will average US$ 84.43 per barrel in 2024, a significant increase compared to previous projections.

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Challenges for Oil Investors

OPEC+ Compliance
Investors are first keeping an eye on quarterly data on supply to verify whether OPEC and its allies, known as OPEC+, have adhered to their planned voluntary production cuts of 2.2 million bpd, highlighting the importance of OPEC and OPEC+ decisions in the oil market.

If the group complies, this could lead to a small deficit of over 500,000 bpd, ANZ said, illustrating the influence of OPEC and OPEC+ actions on prices and oil supply.

Ann-Louise Hittle of WoodMac said: ‘The first quarter will be critical because we can evaluate adherence to OPEC+’s voluntary supply cuts.’ OPEC and OPEC+ decisions can have significant implications for prices and oil supply.

Impact of Exports and Sanctions

Wildcards – Russia, Iran, Venezuela
Venezuelan oil has returned to global markets since then. Washington suspended sanctions on the OPEC producer for six months until April, highlighting the volatility of oil exports.

Another six-month extension is likely, provided President Nicolás Maduro’s government follows an electoral roadmap agreed upon with the opposition for a presidential election, JP Morgan analysts said, emphasizing the political instability and its impact on the oil market.

The resumed supply of heavy oil from Venezuela to the United States and India could reduce demand for rival types such as Iraq’s Basrah Heavy and Canada’s Cold Lake, traders said, shedding light on the effects of oil exports across different regions of the world.

Global Market Trends

New Refineries
The tightness in refined products, especially diesel after the Russian invasion of Ukraine, is expected to ease as over 1 million bpd of new refining capacity comes online in China, India, Mexico, the Middle East, and Nigeria in 2024, analysts said, highlighting changes in refining capacity across different regions.

This includes the newly arrived Chinese Yulong Petrochemical, expansions at Indian refineries in Panipat and Koyali, Nigeria’s Dangote project, and Mexico’s Dos Bocas, demonstrating significant global refining capacity expansion.

Quality Mismatch in Oil
Non-OPEC producers led by Brazil, Guyana, and the United States are expected to drive production growth in 2024, increasing the supply of light sweet oil, while medium sour oil types are likely to remain constrained by OPEC+ cuts, highlighting changes in the composition and quality of oil available in the market.

This could narrow the price spreads between different crude oil types globally, Dwivedi of Macquarie said, with medium-grade oil trading close to parity with light sweet oil at a typical discount of US$ 2 to US$ 4 per barrel, while the discount for heavy oil versus light oil could decrease to around US$ 4 per barrel, down from US$ 8 previously, underscoring changes in the relative prices of different types of oil.

Oil in Focus: Tensions and Expectations for 2024 Investments

Oil Investors Face 2024 With Supply Glut and Demand Uncertainties, Say Reuters Economists. OPEC+, Exports, Refineries and a Strong Dollar Are Key Factors.

Increase in Oil Price Forecasts for 2024

Challenges for Oil Investors

Impact of Exports and Sanctions

Global Market Trends

With billions in loans, China is rebuilding Nigeria’s railway network from scratch, abandoning the British colonial tracks that have turned to scrap and creating a corridor of over 1,300 km to take the load off the roads of Africa’s largest economy.

A British company has installed in the middle of the ocean the world’s first floating platform that generates electricity 24 hours a day from the temperature difference between the surface and the depths of the Atlantic, without relying on wind or sun.

Great Atlantic Sargassum Belt has ceased to be a climatic phenomenon and has become a biological system that feeds on itself, with 8,000 kilometers in length, 37 million tons of algae, and scientists confirm that it is now permanent.

China is building an artificial island in the middle of the sea, covering 20 km², to construct the largest offshore airport in the world, the Dalian Jinzhouwan. This $4.3 billion project is anchored on more than 3,000 pillars embedded in the rock beneath the ocean and is scheduled to open in 2035.

Forget petroleum-based asphalt: a Scottish company transforms 684,000 plastic bottles into one kilometer of road that is 60% more resistant and up to 10 times more durable, and the technology has already started replacing traditional asphalt in more than 30 countries.

Engineers had to pour concrete mixed with tons of ice throughout entire nights in the Dubai desert to erect the Burj Khalifa; any carelessness could clog the pipes half a mile high.

The James Webb telescope spotted a planet 700 light-years from Earth with mornings full of sand clouds and nights with clear skies, the temperature difference between the two hemispheres reaches an impressive 170 degrees.

The “Giant’s Causeway” holds more than 40,000 basalt columns that seem to be fitted together by human hands, but were born from violent volcanic eruptions about 60 million years ago and transformed the coast of Northern Ireland into one of the most surreal landscapes ever seen on Earth.

Study in Portugal: Brazilians can obtain scholarships of up to 100% at a business school recognized by the Financial Times, with AI and management courses in Lisbon, international certification, accommodation included, and a program valued at R$ 46,000.

Deputies approve ‘trans bathrooms’ with mandatory construction, a fine of R$ 5,400, risk of closure, suspension of state registration, and a deadline of only 6 months for adjustments in companies, hospitals, and shopping malls in RJ.

Australia launches the first unmanned 3D-printed drone boat in the Southern Hemisphere, made with recycled waste in 40 hours, reaches 40 knots, and can change maritime surveillance with production of up to 100 units per month in a military demand scenario.

Brazil makes first reforestation concession in the Amazon, grants 145,000 degraded acres to a startup for 40 years and tests if carbon credits can help curb the tipping point of the planet’s largest tropical forest.

Oil in Focus: Tensions and Expectations for 2024 Investments

Oil Investors Face 2024 With Supply Glut and Demand Uncertainties, Say Reuters Economists. OPEC+, Exports, Refineries and a Strong Dollar Are Key Factors.

Increase in Oil Price Forecasts for 2024

Challenges for Oil Investors

Impact of Exports and Sanctions

Global Market Trends

With billions in loans, China is rebuilding Nigeria’s railway network from scratch, abandoning the British colonial tracks that have turned to scrap and creating a corridor of over 1,300 km to take the load off the roads of Africa’s largest economy.

A British company has installed in the middle of the ocean the world’s first floating platform that generates electricity 24 hours a day from the temperature difference between the surface and the depths of the Atlantic, without relying on wind or sun.

Great Atlantic Sargassum Belt has ceased to be a climatic phenomenon and has become a biological system that feeds on itself, with 8,000 kilometers in length, 37 million tons of algae, and scientists confirm that it is now permanent.

China is building an artificial island in the middle of the sea, covering 20 km², to construct the largest offshore airport in the world, the Dalian Jinzhouwan. This $4.3 billion project is anchored on more than 3,000 pillars embedded in the rock beneath the ocean and is scheduled to open in 2035.

Forget petroleum-based asphalt: a Scottish company transforms 684,000 plastic bottles into one kilometer of road that is 60% more resistant and up to 10 times more durable, and the technology has already started replacing traditional asphalt in more than 30 countries.

Engineers had to pour concrete mixed with tons of ice throughout entire nights in the Dubai desert to erect the Burj Khalifa; any carelessness could clog the pipes half a mile high.

The James Webb telescope spotted a planet 700 light-years from Earth with mornings full of sand clouds and nights with clear skies, the temperature difference between the two hemispheres reaches an impressive 170 degrees.

IBS and CBS regulations change credit reimbursement and raise financial alert in the oil and gas industry

China puts into operation the largest shallow lithology offshore field in the country, with 79 wells, heavy oil, and a production of 20,000 barrels per day.

Petrobras announces an investment of R$ 2.8 billion in Amazonas to expand natural gas production in Urucu and modernize the river fleet, boosting energy, logistics, and the regional economy with new vessels adapted for operation in the Amazon.

While Brazil sits on the pre-salt and still imports diesel, Turkey, which produces almost no oil, crossed half the world to drill 7,500 meters below the sea in Somalia in search of its own fuel.

The “Giant’s Causeway” holds more than 40,000 basalt columns that seem to be fitted together by human hands, but were born from violent volcanic eruptions about 60 million years ago and transformed the coast of Northern Ireland into one of the most surreal landscapes ever seen on Earth.

Study in Portugal: Brazilians can obtain scholarships of up to 100% at a business school recognized by the Financial Times, with AI and management courses in Lisbon, international certification, accommodation included, and a program valued at R$ 46,000.

Deputies approve ‘trans bathrooms’ with mandatory construction, a fine of R$ 5,400, risk of closure, suspension of state registration, and a deadline of only 6 months for adjustments in companies, hospitals, and shopping malls in RJ.

Australia launches the first unmanned 3D-printed drone boat in the Southern Hemisphere, made with recycled waste in 40 hours, reaches 40 knots, and can change maritime surveillance with production of up to 100 units per month in a military demand scenario.

Brazil makes first reforestation concession in the Amazon, grants 145,000 degraded acres to a startup for 40 years and tests if carbon credits can help curb the tipping point of the planet’s largest tropical forest.