Citi Cuts Brent Oil Price Forecast to $74 in 2024 on Ample Supply

Brent Crude oil prices are expected to average $74 per barrel this year, Citi said in a note, revising down its previous forecast by $1 a barrel, due to expectations of excess supply.  

The researchers at the bank also slashed their Brent forecast for 2025 by $10 per barrel, and now see the international benchmark averaging $60 a barrel next year.

“We believe softer market fundamentals, absent major supply disruptions, will result in OPEC+ rolling over its Q1 2024 production cuts throughout the whole 2024 and start tapering them only in H2 2025,” Citi’s analysts wrote in a note carried by Reuters.

Due to the OPEC supply management, Brent prices are likely to hold above $70 a barrel this year, as the cartel and its partners in the OPEC+ alliance are expected to keep the market “finely balanced,” according to Citi.  

The analysts, however, warned that the rising tensions in the Red Sea and the Gulf of Oman could lead to a spike in the risk premium in oil prices in the short term.   

Barring a major geopolitical escalation resulting in a large supply outage—which cannot be discounted—, oil prices are unlikely to reach $100 a barrel in 2024 as American oil production and exports are rising faster and higher than expected, and market sentiment about demand is downbeat, especially for the first half of 2024.  

Expected weak global economic growth would slow oil demand growth in 2024, keeping the average U.S. benchmark WTI Crude oil price below $80 per barrel, according to the monthly Reuters poll at end-December, in which analysts revised down their forecasts for 2024 from the previous month’s projections.   

Brent Crude prices are now expected to average $82.56 per barrel this year, down from the $84.43 consensus forecast in the November poll.

In the December Reuters survey, only one of 34 contributors said they expected the average Brent Crude prices to be above $90 per barrel in 2024.

By Michael Kern for Oilprice.com  

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