Crude oil price may hover at $80 per barrel till June 2024: S&P

New Delhi: Crude oil price is likely to hover at around $80 per barrel until June next year in the international market amid oversupply, but deficit in supply is likely in the third quarter of 2024 that would push the prices closer to $90 a barrel, analyst at S&P Global said on Thursday.

S&P Global Commodity Insights’ supply-demand balances show a situation of oversupply and hence stock builds in the first half of 2024, with some deficit seen only by the third quarter of 2024 calendar year, Pulkit Agarwal, Head of India Content at S&P Global Commodity Insights, said at a select media roundtable.

On oil price outlook, Agarwal said it would be heavily dependent on the action of the oil cartel OPEC+ that includes the Organisation of Petroleum Exporting Countries and allies including Russia.

“In our base case, oil prices will likely hover above $80 per barrel and can inch closer to $90 per barrel by Q3 of 2024,” Agarwal said.

OPEC+ combined output stood at 42.71 million barrels per day in October, the highest in five years. The group’s output in October is higher by 180,000 barrel per day when compared with the previous month, as per Platts survey by S&P Global Commodity Insights.

While the group’s two largest producers Saudi Arabia and Russia have announced voluntary production cuts up to the end of 2023, the countries like Iraq, Iran and Angola have registered a significant jump in production in the recent months.

Agarwal underlined that global oil demand growth remained strong defying challenges from high interest rates, stubborn inflation, slow economic growth and geo-political tensions.

“This growth is driven by demand normalisation and China’s re-opening. Once these factors ceased to be at play, we would see demand growth slowing in 2024 and 2025,” he said.

“The non OPEC+ supplies growth continues to remain strong, and could more than make up for the slowing demand growth expected in 2024. This makes the position of OPEC+ quite critical at a time when they are already making significant production cuts,” he added.