Oil market: 2024 outlook

Global oil demand is likely to increase by 1.5 million barrels per day (mbd) in 2024, compared to forecast growth of 2 mbd in 2023 on the back of modest world real GDP growth, which we forecast will decline to 2.8% next year from an expected 3.0% in 2023. However, there will be considerable divergence, with demand in advanced economies likely to contract by 0.2 mbd on the back of subdued growth and the energy transition. By contrast, oil demand in emerging economies, where GDP could rise 4.1% next year, is expected to increase by 1.7 mbd in 2024 from 1.5 mbd in 2023.

We expect additional oil supply next year to come essentially from non-OPEC+ countries. The 13 fastest-growing drilling projects, each expected to produce over 100,000 barrels per day in 2024-26, are likely to account for 60% (3.3mbd out of 5.6mbd) of the total new production forecast to come on stream in the same period. The largest contributions are set to come from deepwater projects in Brazil and Guyana, as well as from US shale. In 2024, we expect OPEC+ to continue to limit production in order to support oil prices, although compliance with existing voluntary production cuts has been faltering.

In 2024, non-OPEC+ countries are likely to add 1.3 mbd to global oil supply. This increased supply will not be enough to meet the 1.5 mbd increase in global demand we expect. In addition, new production in the US is clearly losing momentum. Indeed, the production of US shale oil has virtually stagnated since August while US companies’ continued investment discipline suggests a rapid significant rebound is unlikely.

For the oil market to remain in balance, the OPEC+ cartel will have to maintain its current level of production. This will mean prolonging the current voluntary cuts. But we expect the rise in non-OPEC+ production to climax at the end of 2024. That is why we expect the global oil supply-demand balance to flip into oversupply by the end of next year.

Accordingly, our oil price scenario envisages Brent oil being sustained close to USD90 per barrel in early 2024 on the back of increased demand in emerging economies, led by China. Then, slight oversupply is likely to push the barrel of Brent down towards USD80.

The main risks to our central scenario are higher and earlier-than-expected additional supply from non-OPEC+ and weaker Chinese economic growth than we are forecasting. Such developments could put downward pressure on oil prices.