What to expect from the price of a barrel of oil?
Stanley Reed , one of the most respectable journalists in the energy field, highlighted some points in his article today in the NYT, about the future prices of a barrel of oil that I follow closely:
- The annual OPEC meeting was postponed due to the difficult decision to further reduce production in the face of falling oil prices , postponing investment plans in strategic areas by governments.
- The price of Brent crude oil has fallen to around $82 per barrel, putting pressure on countries such as Saudi Arabia and Russia to consider further production cuts. The pressure on OPEC is evident , with the US contributing 80% of the global increase in supply in 2023.
- Smaller OPEC producers are urged to accept lower production limits, while the UAE gets a higher level.
- Demand for oil may slow in 2024 due to the economic slowdown in China and the rise of energy efficiency and electric vehicles.
Reed 's view suggests an anticipated bearish price of oil , but allow me to add opposing perspectives:
The energy transition may take longer than expected, in addition to being consuming and requiring a considerable increase in mining activity , which is equally harmful to the environment.
Additionally, two ongoing geopolitical conflicts in oil-producing areas are causing uncertainty and could put greater pressure on this commodity.
Few mention it, but there are activities in which oil is irreplaceable , such as in the plastics industry, agricultural inputs and industries in general. Furthermore, the image of an American cowboy trading his Ford V8 for an electric Tesla or an Easy Rider riding his electric Harley seems inconceivable even at the level of imagination.
Why do I follow oil prices?
I make price forecasts for an investment fund focused on commodities.