OPEC has updated its forecasts for global average oil production for the years 2024-2025, while keeping expectations for demand almost unchanged. Let's take a look at the current situation in the oil market and consider what the future price of this commodity might be.
Assuming that OPEC maintains current production levels and forecasts for production from Russia and the United States increase, a shortfall in supply is still expected, reaching around 1.3% of global demand in 2024.
For comparison, similar levels of shortfall were observed in 2021 when oil prices rose by 49%, and the shortfall then amounted to 1.7% of global demand. Throughout 2023, there was a cooling in the oil market, with prices falling by 10.3%, and the level of shortfall decreased to 0.38%.
Continued oil supply shortages in the market are forcing countries to use their reserves of this commodity. This indicates a trend of declining oil reserves, which in the United States have already reached their lowest level since 1985! Total US reserves over the past 12 months have decreased by a combined 5%.
The lack of adequate oil reserves can lead to a range of negative consequences. It can result in energy price increases, directly impacting living costs for consumers and expenses for businesses. Threats to energy security are another serious risk, as disruptions in supplies due to insufficient reserves can result in fuel shortages.
This, in turn, can have negative effects on the economy and national security, and even lead to an economic recession due to increased production and transportation costs.
Furthermore, countries without sufficient reserves may become more dependent on imports, making them more susceptible to changes in prices and the export policies of other nations.
Maintaining strategic oil reserves is therefore considered a key element of energy policy and national security by many countries, aiming to ensure stability and energy independence in the face of unpredictable events in the global market.
The decline in oil reserves has occurred despite record levels of production of this commodity. The United States, being the largest single producer of oil and accounting for 20.5% of global production, is currently utilizing almost all of its production capacity. This severely limits the potential for further increases in production.
According to forecasts, it appears that the United States' ability to influence the reduction of oil prices is practically exhausted.
According to data from the Energy Information Administration (EIA), the United States has experienced historically high production growth, utilizing up to 94% of its production capacity and the lowest level of reserves of this commodity since 1985. This, combined with growing shortfalls, which OPEC analysts predict at levels comparable to those in 2021 when oil prices rose by 49%, and expectations for economic recovery, could lead to an increase in the price of oil exceeding $100 per barrel.
16.02.2024
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