Crude oil prices can hit USD 100 a barrel in 2024 if OPEC maintains cuts: Vitol CEO Russell Hardy

According to S&P Global Commodity Insights, Russell Hardy, the CEO of Vitol, delivered this forecast, indicating that spot crude prices could surge to USD 100/b later this year if Organization of the Petroleum Exporting Countries (OPEC+) continues its production discipline and persists in withholding crude from global markets.

Crude prices are rising, inching closer to the USD 100 per barrel mark amid supply disruptions, geopolitical uncertainties and signs of firmer demand. According to S&P Global Commodity Insights, Russell Hardy, the CEO of Vitol, delivered this forecast, indicating that spot crude prices could surge to USD 100/b later this year if Organization of the Petroleum Exporting Countries (OPEC+) continues its production discipline and persists in withholding crude from global markets.

Brent crude futures, the international benchmark for oil prices, witnessed a notable uptick on April 8, trading above USD 91/b for the first time since October. This surge represents an increase of almost 20 per cent since the beginning of the year, driven by mounting fears of widening conflict in the Middle East and growing expectations of robust economic fundamentals.

Since late 2022, OPEC+ has implemented voluntary production cuts, removing approximately 5 million barrels per day (b/d) of crude from the market in a bid to support oil prices amidst concerns over the pace of global economic growth. Russell Hardy noted that the current market dynamics suggest a supply-constrained environment, with crude prices averaging around USD 83/b so far this year.

He suggested that a price range of USD 80 to USD 100/b seems reasonable given OPEC's control over global inventories. On the demand side, Vitol anticipates global oil demand growth of 1.9 million b/d in 2024, mirroring the figures from the previous year.

Key drivers of this growth include robust demand from China and India, as well as increased consumption of jet fuel due to a resurgence in air travel. Hardy said, "Vitol is expecting global growth of 1.9 million b/d this year, similar to 2023, with China, India and jet fuel from increased air travel continuing to underpin growth."

Speaking at the FT Commodities Global Summit in Lausanne, Sebastian Barrack, head of commodities at Citadel, echoed sentiments of an impending supply crunch in the oil market. He emphasized that OPEC+ has regained control over the market in recent years, paving the way for a potentially tight oil market in the second half of 2024.

The anticipation of oil prices reaching USD 100/b this year has gained momentum in recent months, fueled by escalating tensions between Israel and Iran, as well as stronger-than-expected demand data. S&P Global Commodity Insights' oil analysts highlighted the upside risk to oil prices if OPEC+ maintains its production cuts and if further damage occurs to Russian oil infrastructure from Ukrainian drone attacks.

Despite the possibility of OPEC+ loosening its voluntary cuts if oil prices surge too high, analysts believe that talk of a tightening oil market in the second half of 2024 could push prices toward the USD 100/b threshold. (ANI)

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