In the context of a gloomy world economic recovery in 2023, the Organisation of the Petroleum Exporting Countries and a number of other major oil exporting countries, known as OPEC+, have agreed to voluntary production cuts totalling 2.2 million barrels per day in the first quarter of 2024, with Saudi Arabia leading the way with a voluntary reduction of 1 million barrels per day. The above reduction in output has made an important contribution to pushing up the price of “black gold”.
However, speaking to the press on January 27, the CEO of Gazprom Neft (Russia's leading oil and gas company), Alexander Dyukov, said that OPEC+ does not need to further cut the oil supply. The reason is that oil prices are currently at a relatively high and stable level as spring approaches and oil demand is expected to increase. Analysts say that at the OPEC+ ministerial meeting scheduled to take place on February 1, OPEC+ may decide the oil production level for April 2024 and the coming time.
In addition, oil prices also increased because of positive recovery signals from economies, leading to a forecasted increase in oil demand. Closing the trading session last week, Brent crude oil price increased by 1.4% and WTI crude oil price increased by 0.8%, reaching the highest level since November 2023 until now.
On the morning of January 29 (Vietnam time), Brent crude oil price reached 84.48 USD/barrel, and Texas light sweet crude oil price (WTI) reached 78.93 USD/barrel. The recovery of gasoline prices is strongly supported by the US's 2023 economic growth reaching 2.5%, far exceeding analysts' expectations.
In particular, this country’s GDP growth in the fourth quarter of 2023 reached 3.3% - contrary to previous concerns. At present, the possibility of the US having a “soft landing” in 2024 is greater than ever, as inflation has decreased, the unemployment rate is still low and the US Federal Reserve can cut interest rates from March.
Assessing the world economic outlook in 2024, most analysts believe that “the worst is probably over”. Inflation is trending down in many regions around the world. According to the World Economic Outlook report of the International Monetary Fund (IMF), core inflation is on track to decrease from 9.2% in 2022 to 5.9% in 2023 and will likely continue to decrease to about 4.8% in 2024.
Meanwhile, according to the Asian Development Bank (ADB), the Asian region's economy showed positive signs, helping the region’s growth in 2023 to reach 4.9%, mainly coming from the recovery of the Chinese economy. ADB recorded the economic growth of the region of 46 economies, excluding Japan, Australia and New Zealand in its Asian Development Outlook report - thanks to the “leverage” of policies to stimulate domestic consumption.
Facing the above optimistic signals, OPEC has just forecast that in 2024, global oil demand will increase by 2.2 million barrels/day compared to 2023, unchanged from expectations in last month's report. Also, according to this organisation, global oil demand will grow strongly at 1.8 million barrels/day by 2025 due to a strong global economic recovery. Meanwhile, global economic growth will reach 2.8% in 2025, higher than the forecast of 2.6% growth this year.
However, despite the stronger thrust above, 2024 still has many potential factors that can hinder the increase in “black gold” prices. World economic growth is forecast to remain difficult this year. In the newly released World Economic Situation and Prospects 2024, the United Nations warned of challenges such as escalating conflicts, weak global trade, high-interest rates and increasing climate disasters threatening the global economy.
The IMF forecasts global economic growth in 2024 at 2.9%. But, even if the world economy reaches the growth rate as predicted above, in the next two years the growth rate will still be below 3%, the level before the COVID-19 pandemic broke out in 2020. Therefore, demand for “black gold” is unlikely to increase in the short term.
In addition, analysts are also concerned that the above optimistic forecasts about the world economy and oil prices may not come true due to a series of “black swan” events,such as the COVID-19 pandemic and the Russia-Ukraine conflict, which suddenly occurred in recent years, thereby “casting a shadow” on the outlook for oil prices and the global economic picture in 2024.
