Ahmed Osama, Everest's chief economist, said oil prices have seen a sharp decline since the last quarter of 2023, after reaching a peak of around $95 a barrel. Despite the recent… Since the continuation of OPEC Plus, but declines have occurred due to several reasons, the most important of which is the willingness of some African countries to increase production in the coming period, in addition to expectations, the United States will reach its maximum production level in 2024, which will put significant pressure on prices. Also, expectations of a slowdown in global growth in the current year will lead to continued decline in oil prices. In the coming period, but according to expectations, the worst-case scenario would be a decline to $62 per barrel and no more than that as a result of OPEC Plus keeping oil prices high at those levels.
Osama added: “Despite all these reasons supporting a continued decline, all this may change with the expectation that the big banks will switch to a stimulus policy, which will lead to a strong recovery for companies and thus increase oil demand, especially in the case of continued cuts by OPEC Plus, which is what it is.” This will lead to consolidation of prices, especially if the maritime shipping problems currently facing the world and the current geopolitical tensions continue. This could lead to oil supply shortages at a time of the year that could see oil rise sharply again as it could once again extend above the $90 per barrel level that the major banks had expected last year.
One of the factors that could push oil back up is continued economic stimulus in China, which saw some economic turmoil in the previous year, leading to a decrease in its oil supply. If the economic stimulus plan succeeds in the coming months, as China is currently witnessing, oil presents several scenarios. During the year, it depends on what happens, and trends can change significantly according to the economic and geopolitical changes we mentioned earlier.
The UAE is expected to voluntarily cut production by 163,000 barrels per day until the end of the quarter in 2024, and then phase out the cuts thereafter depending on market conditions at that time. Achieving a green economy and reducing oil and gas flaring.
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