Experts say the oil price is ‘over a barrel’ as demand continues to weaken

on Dec 15, 2023
  • The International Energy Agency has released its December Oil Market Report (OMR).
  • Both the IEA and S&P Global have called out oil's continuing declines in price as demand falls.
  • The reports also point to other interesting shifts of power in the oil space during 2024.

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The International Energy Agency (IEA) recently released its December Oil Market Report (OMR), in which it described oil prices, unambiguously, as ‘over a barrel’.

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Oil market sentiment turned decidedly bearish in November and early December as non-OPEC+ supply strength coincided with slowing global oil demand growth. The extension of OPEC+ output cuts through the first quarter of 2024 did little to prop up oil prices… While non-OPEC+ supply growth is set to lose momentum in 2024, forecast gains of 1.2 million barrels per day (mb/d) may yet exceed the increase in global oil demand.”

Evidence of a slowdown in oil demand is mounting, with the pace of expansion set to ease from 2.8 mb/d year-on-year in Q3 of 2023 to 1.9 mb/d in Q4. A deterioration in the macroeconomic outlook led to a downward revision in our global oil consumption growth forecast of nearly 400 thousand barrels per day in the final three months of the year.”

Read more: OPEC report hints at a tough 2024 – and further supply cuts to come

OPEC’s control of the oil market slipping

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Potentially even more interesting in 2024 may be the shift of power from the OPEC exacerbated by the OPEC countries’ recent voluntary decision to make extensive supply cuts – to what were previously more minor oil suppliers. As the IEA report stated:

The shift in global oil supply from key producers in the Middle East to the United States and other Atlantic Basin countries, and the dominant impact of China and its booming petrochemical sector on oil demand, are profoundly impacting global oil trade.” 

This lines up with another report released on December 15th, the S&P Global’s 2024 Energy Outlook. In it, S&P Global Commodity Insights head of oil markets Kurt Barrow says that:

Strong non-OPEC+ supply growth and slowing oil demand growth have led OPEC and its allies to curtail output and support prices. While this tactic has achieved some success, maintaining discipline among member countries may be difficult in 2024 as the loss of market share continues and non-OPEC+ volumes increase. OPEC+’s ability to follow through on voluntary production cuts will be key to crude pricing over the next year.”

The oil price and COP28

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Generally speaking, dampened oil prices are thought to be caused by slowdowns, plus weakening economic outlooks and GDPs. However, this time around many have opined that oil prices, leaking dollars due to their lack of demand, may be sliding downward due to the 28th Conference of the Parties. COP28 ended this week with – while the mention of fossil fuels outright was a first for the annual summit, many were disappointed in its toning down of the much-called-for wording of ‘phasing out’ fossil fuels, in favour of ‘transitioning away’ from them instead.

Nevertheless, Oil Change International commented on December 13th that:

While we didn’t get there, we secured the first UN climate agreement that calls on all countries to ‘transition away from fossil fuels’ sent an unprecedented signal to the fossil fuel industry that its days are numbered.”


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