Key conclusions
1. Based on Q1 2024 results, analysts' forecasts proved correct: the oil market experienced a slight deficit, which could persist until the end of the year.
The implementation of additional voluntary supply cuts by OPEC+ members and the possibility that these cuts could be extended in the future may put pressure on the market balance.
Some analysts believe that an incomplete implementation of voluntary cuts and a greater supply from OPEC+ countries could balance the market, while the end of voluntary production cuts by OPEC+ countries will create a small market surplus by 2025.
2. Despite the reduction seen in global oil demand in Q1 2024, China, India and Middle East countries increased oil consumption.
Weak oil demand in Q1 2024 was due to low refinery throughput on the back of seasonal factors.
In the mid-term, analysts’ forecasts differ: The International Energy Agency (IEA) and US Energy Information Administration (EIA) are more conservative and expect a slowdown in oil demand growth. OPEC analysts, on the other hand, do not expect a significant decline in demand.
The main sources of oil consumption growth remain non-OECD countries, especially China and India. Demand for oil in the Middle East and the US is also forecast to rise.
3. According to Q1 2024 results, the global oil supply declined.
OPEC+ members adhered to voluntary production cuts until the end of 2024, and additional voluntary supply cuts were announced for Q1-Q2 2024.
Despite production cuts by OPEC+ countries, by the end of 2024 the oil market supply is projected to increase due to production growth from the US, Guyana, Brazil (an OPEC+ member but with no quota), Canada, and Norway.
Production growth momentum will continue into 2025, driven by both non-OPEC+ and OPEC+ countries, subject to voluntary cuts ending.
4. In Q1 2024, the upward momentum in Brent crude prices continued against a background of various geopolitical factors, as well as a reduction in the oil supply.
In Q1 2024, Brent crude oil quotes were in the range of USD 75-87/bbl. The average price at the end of Q1 2024 was USD 83/bbl, which was 2.1% higher than for Q1 2023 and comparable to the average quote for all of 2023.
The oil price forecast for 2024-2026 is characterised by being more consolidated. However, there is a lack of consensus among analysts regarding mid- and longterm forecasts, as demonstrated by a wider range of estimates.
The current long-term (post-2028) consensus forecast for the Brent crude price is around USD 72/bbl, in real terms, in 2024 prices.
