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Brent crude may hit $100/barrel this year if OPEC+ continues output cut
The crude price in the international market could hit $100 a barrel this year if OPEC+ (the Organization of Petroleum Exporting Countries) continues with its production cut, said Russell Hardy, chief executive of the world’s largest energy trader, Vitol.
Russell, speaking at the FT Commodities Global Summit in Switzerland’s Lausanne, also mentioned that Vitol is expecting global growth of 1.9 million barrels a day this year, similar to 2023, with China, India, and jet fuel from increased air travel continuing to underpin growth.
“It’s really a supply-constrained market, but we’ve averaged about $83/b so far this year, so $80 to $100/b feels like a sensible range for the market given OPEC’s control of inventories around the world,” said Hardy.
Due to various geopolitical issues, the Brent crude price is touching a new high, and today it is trading at $89.93 a barrel at 19.05 PM IST. It went above $91 per barrel on April 8, 2024, for the first time since October 2023, an increase of almost 20% since the start of the year.
The ongoing tensions between Israel and Iran over the OPEC producer’s support for Hamas and recent attacks by Ukraine on Russian oil property can further increase the crude price in the international market. The voluntary production cut of 5 million barrels per day of crude announced by OPEC+ will further aggravate the situation.
“Predictions that oil prices will hit $100/b this year have been growing of late, fueled by escalating tensions between Israel and Iran over the OPEC producer’s support for Hamas in Gaza and stronger-than-expected demand data,” said at S&P Global in a report.
The situation is further aggravated by OPEC+’s voluntary production cut of 5 million barrels per day, announced in October 2022. Analysts at S&P Global believe the recent extension of these cuts, particularly by the “OPEC+ Six” (Iraq, the United Arab Emirates, Kuwait, Algeria, Kazakhstan, and Oman), combined with potential damage from Ukrainian attacks, increases the risk of even higher oil prices.
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