Steel pipelines in a crude oil factory. Credit: Kodda/Getty images.

US EIA estimates show average annual crude oil prices in 2024–25 will remain the same as in 2023. Global supplies and demand for petroleum liquids will also be relatively balanced over the next two years.

According to the latest estimates, crude oil prices are expected to increase from $78 per barrel (bbl) in December 2023 to $85/bbl in March 2024. This rise is attributed to the OPEC+ production cuts, resulting in global stock draws of 810,000 barrels per day during the first quarter of 2024.

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On 8 January, oil prices dropped by more than 3% due to the sharp price cuts made by Saudi Arabia – the top exporter – and a rise in OPEC output. This offset the supply concerns that resulted from escalating geopolitical tension in the Middle East.

A voluntary cut of 2.2 million barrels per day was agreed upon in the most recent OPEC+ meeting on 30 November, with the reduction set to last until March 2024. 

These reductions are in addition to lower production targets set in June 2023 and the current voluntary cuts. In 2024, OPEC+ is expected to produce below its declared targets, according to the EIA.

The price of Brent crude oil saw a fall of 3.4%, or $2.64, and settled at $76.12/bbl. Meanwhile, Reuters reported that US West Texas Intermediate (WTI) crude futures dropped by 4.1%, or $3.04, settling at $70.77/bbl. 

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In the first week of 2024, both contracts saw growth of more than 2% due to the escalation of geopolitical tension in the Middle East, citing the attacks on ships in the Red Sea by Iran-backed Houthis in Yemen.

“Oil prices capped a choppy week with gains on Friday helping to give both Brent and WTI a positive start to the year,” said Edward Bell, head of market economics at Emirates NBD, as reported by UAE state-owned media company The National. 

“Geopolitical anxiety over security of supply as well as disruptions to Libya’s supply are weighing against softening demand conditions,” Bell said.

Saudi Arabia lowered its flagship Arab Light crude’s February official selling price to Asia to its lowest level in 27 months on Sunday due to increased supply and competition from other exporters, Reuters reported. 

The EIA also forecasts OPEC+ crude oil production to fall from 37.1 million barrels per day in 2023 to 36.4 million in 2024, and expects OPEC+ production to increase to around 37.2 million barrels per day (b/d). 

The EIA said on its website that it expects “non-OPEC+ production to average 53.0 million b/d in 2024 and 53.9 million b/d in 2025”, driven by production increasing in the US by 0.4 million barrels per day in 2024 and 2025.