Oil prices rose on Thursday after an oil tanker was boarded by an armed group in Oman, raising the prospect of escalating conflict in the Middle East.
February WTI crude oil (CLG24) on Thursday closed up +0.65 (+0.91%), and Feb RBOB gasoline (RBG24) closed up +4.70 (+2.27%).
The Gold for Oil (G4O) program emerged in response to the 1973 oil crisis, triggered by an oil embargo imposed by OPEC members, particularly Saudi Arabia, on nations perceived as supporting Israel in the Yom Kippur War (Birjandi, 2003). This crisis caused a global energy shortage and a surge in oil prices, prompting negotiations between oil-producing and importing countries to exchange oil for gold instead of conventional fiat currencies, allowing oil exporters to accumulate gold reserves (Falola & Genova, 2005).
A new crisis is brewing in one of the world’s trade arteries, threatening to snarl supply chains and push up oil prices and broader inflation at a time of slowing economic growth.
Increased distillate production and slowing economic activities have led to rising diesel stocks and falling prices.
Weak manufacturing activity in the U.S. and Europe contributes to reduced diesel demand, easing the market.
Geopolitical tensions near the Red Sea present potential disruptions, threatening to impact diesel supply chains and market stability.
Top U.S. banks forecast a median Brent price of $85 for 2024, citing demand growth and potential supply disruptions.
Goldman Sachs revised its forecast to $70-$90 per barrel, while Citigroup predicts an average price of $75, factoring in slower demand growth and higher U.S. output.
The global oil market outlook for 2024 is largely bearish, but increased demand, especially from Asia, could lead to higher prices.
Oil prices held steady on Tuesday amid uncertainty over voluntary output cuts by OPEC+ and as continued tension in the Middle East spurred supply concern.
Brent crude futures LCOc1 edged up 13 cents to $78.16 a barrel by 0106 GMT, while U.S. West Texas Intermediate crude futures CLc1 were up 18 cents at $73.22 a barrel.
This week, the oil market witnessed a significant rebound, driven by a confluence of factors including a weaker dollar and revised demand forecasts from major energy organizations.
Oil prices are on course for their first weekly increase in eight weeks, a shift in sentiment that was driven in large part by the Federal Reserve pledging to cut interest rates next year.
OPEC+ faces record-breaking U.S. oil production and rising supply from other non-OPEC+ producers, including Brazil, Guyana, Canada, and Norway.
Barring a major geopolitical escalation resulting in a large supply outage, oil prices are unlikely to reach $100 a barrel in 2024.
Paul Sankey: Record-high U.S. oil production is a “huge problem” for OPEC+