Oil prices could rise further this year, but 2024 demand to slow sharply

OPEC+ supply cuts could erode oil inventories in the rest of this year, potentially driving prices even higher, before economic headwinds limit global demand growth in 2024, the International Energy Agency (IEA) said on Friday.

Tighter supply driven by oil output cuts from OPEC and its allies, together known as OPEC+, and rising global demand have underpinned a rally in oil prices, with Brent crude hitting highs of over $88 a barrel on Thursday, the highest since January.

The IEA said if OPEC+ current targets are maintained, oil inventories could draw by 2.2 million barrels per day (bpd) in the third quarter and 1.2 million bpd in the fourth, “with a risk of driving prices still higher”.

“Deepening OPEC+ supply cuts have collided with improved macroeconomic sentiment and all-time high world oil demand,” the Paris-based energy watchdog said in its monthly oil market report.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies began limiting supplies in late 2022 to bolster the market and in June extended supply curbs into 2024.

The IEA said that in July, global oil supply plunged by 910,000 bpd in part due to a sharp reduction in Saudi output. But Russian oil exports held steady at around 7.3 million bpd in July, the IEA said.

This report’s information was first seen on REUTERS; to read more, click this link.