Bank of America (BofA) Global Research has revised its 2024 Brent and WTI oil price forecasts upwards. It attributes the adjustment to escalating geopolitical tensions and the continuation of supply curbs by OPEC+. The bank now expects Brent and WTI crude prices to average $86 and $81 per barrel, respectively. It also expects peak oil prices to reach around $95 per barrel during the summer months.
The forecasts highlight the impact of improving economic growth expectations on oil prices. They are likely to contribute to pushing global oil markets into a deficit during the second and third quarters of 2024, estimated at approximately 450 thousand barrels per day.
Geopolitical factors
Geopolitical turmoil has also contributed to the upward revision in the oil price forecasts. Hence, they have emerged as a significant driver influencing oil demand and supply dynamics. Ships have been taking longer trade routes. Moreover, tensions impacted the oil supply with attacks on Russian energy infrastructure. Notably, a Ukrainian drone recently targeted Russia’s third-largest oil refinery. The attack hit a unit responsible for processing around 155,000 barrels of crude per day.
Read: OPEC oil output dips in March amid voluntary cuts and export challenges
OPEC+ supply curbs
OPEC+’s output cuts play a major role in Bank of America’s upward revision of oil price forecasts. The OPEC+ alliance recently decided to extend voluntary oil output cuts of 2.2 million barrels per day into the second quarter of 2024. This collective effort to restrict supply has played a pivotal role in stabilizing oil prices amid ongoing geopolitical uncertainties and evolving market conditions.
Bank of America’s upward revision of oil price forecasts underscores the complex interplay of geopolitical tensions, supply dynamics, and market fundamentals shaping the global oil landscape in 2024. While uncertainties persist, particularly regarding geopolitical developments and the efficacy of supply management efforts, the bank’s outlook signals a potentially volatile yet lucrative environment for oil markets in the coming months.
For more news on energy, click here.
