The year 2023 has seen OPEC+ in active intervention mode as the cartel kept cutting its production to support oil prices and balance the market. As a result, Brent crude oil prices traded at the range of USD70-90/bbl throughout the year after a series of additional voluntary cuttings mainly from the cartel’s de-facto leaders, Saudi Arabia and Russia. Going into 2024, OPEC+ decided to continue the production cut until March 2024 given persistent pressure on oil prices. A price war is unlikely, however, as producers may find a resolution through diplomacy to support the price and sustain market share. On the demand side, the tug of war between interest rate and inflation is almost at an end with the expectation of soft landing without overall contraction in economic activity. 1H2024 oil demand is still expected to remain lacklustre with improvements only in 2H2024 once monetary easing kicks-in. Thus, we expect Brent oil prices to be traded at an average of USD80/bbl throughout 2024, slightly below the USD82/bbl in 2023. We maintain our Neutral call on the sector.
Source: PublicInvest Research - 21 Dec 2023
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UZMACreated by PublicInvest | Nov 12, 2024