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Weakening global economic growth could keep oil prices below $90 per barrel this year and next, barring a major escalation in the Hamas-Israel war that could spill over the Middle East and threaten supply, which could send oil to above $100 and testing $115 a barrel, analysts said in the monthly Reuters poll.

Brent Crude prices are expected to average $84.80 per barrel this year and $86.62 next year, a Reuters survey of 40 analysts and economists found.

So far this year, Brent Crude prices have averaged $82.60 a barrel.

The estimates in the October poll are only slightly higher compared to the forecasts in September for Brent averaging $84.09 per barrel this year and $86.45 next year, made before the Hamas attack on Israel.

Many analysts see slowing global economic growth as the main bearish factor for oil and don't see prices holding above $90 a barrel for long, in case the Hamas-Israel conflict is contained and doesn't involve other state or non-state actors in the Middle East.

But the analysts acknowledge in this month's poll that the situation in the Middle East could be a major driver of oil prices surging to above $100 per barrel and even testing $115 a barrel if a supply disruption occurs.

Still, even if oil were to hit $100, most of the experts polled by Reuters don't see prices remaining in the triple digits for long due to downward pressure from slowing economic growth.

Commenting on oil prices early on Tuesday, Saxo Bank's analysts said,

"Crude oil's war premium has been erased after Monday's sharp drop on growing hopes the Israel-Hamas [war] will remain contained, and not spread to Iran, the market's biggest worry throughout this conflict."

"Also weighing on prices is the short-term demand outlook which is showing signs of softening."

Warren Patterson and Ewa Manthey, strategists at ING, also believe that the most immediate threat from the new conflict in the Middle East is a possible reduction of Iran's oil exports if the U.S. tightens the sanction enforcement.

"In the absence of supply disruptions from the region, it is difficult to see a significant and sustained upside in prices," ING's Patterson and Manthey said.

By Charles Kennedy for

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  • David - 31st Oct 2023 at 2:49pm:
    I believe it when I see it.
  • Mamdouh Salameh - 31st Oct 2023 at 10:20am:
    The world is divided into two halves. One half is the China-led Asia Pacific region where the economy is vibrant, growing fast at 5%-6% and inflation is below 2%. The other half which includes the United States and the EU is virtually stagnant with its economic growth hovering under 1.8% and its inflation ranging from 4%-7%.

    So when the author talks about weakening economic growth keeping
    oil prices below $90 a barrel this year and next, he should first specify that the weakness in the global economy is limited to the US and the EU. Second he is wrong in saying that this is what kept prices below $90. In fact Brent price shot up to $97 and was headed to $100 weeks before the Hamas-Israel conflict erupted.

    Moreover, Brent crude could even touch $150 if the Hamas-Israel conflict spills over the Middle East. A wider war could only happen if Iran and its allies of Hizbullah in Lebanon, its Islamic Revolutionary Guard Corps (IRGC) in Syria, Hamas in Gaza and Houthis in Yemen get involved.

    Were this to happen, Iran will try to disrupt the flow of oil and gas through the Strait of Hormuz. If it succeeds, then Brent crude could hit $150 but won’t stay there for long since the United States will clear the Strait as soon as possible and also because of oil demand destruction.

    Still Brent could range from $100-$110 for a quite a long time in the aftermath.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert
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