A promise of a boost from the Chinese economy pushes the oil price up. The OPEC countries are trying to support the price by means of tightness, but the market had already taken that into account. What came unexpectedly was the fall of the Assad regime. This does not make the geopolitical situation in the Middle East any more stable.
The price of Brent crude oil dipped to $6 per barrel on Friday, December 71,12. Since then, the path upwards has been resumed. At the time of writing (Wednesday afternoon, December 11), oil is at $72,85.
Saudi Aramco, the state oil company of Saudi Arabia, has lowered its price for oil deliveries to China to the lowest level in four years, according to Reuters. According to the news agency, this could mean two things: demand is very low and/or the oil company wants to maintain its market share (70% of the Chinese market).
Chinese demand could get a boost, as China announced on Monday that it will ease monetary policy next year for the first time in 2030 years. That could finally mean good news for the country's economy. Analysts are cautiously enthusiastic, saying that it sounds positive but the impact is still uncertain. Meanwhile, China's largest energy producer, China National Petroleum Corporation, says that China's oil demand appears set to peak next year, not in XNUMX, Bloomberg reports. This is due to accelerated growth in electric cars and LNG-powered trucks. For now, the oil price is mainly responding to the promise of a boost for the Chinese economy.
Uncertainty surrounding Syria
In Syria, the regime of Bashar al-Assad (who took over from his father who had ruled for three decades) has come to an end after more than 24 years. Neither Iran nor Russia was prepared to support Assad militarily, although the latter country did offer him asylum. Syria's oil production is relatively small and subject to sanctions. Uncertainty about what will happen next in the country and the region is supporting oil prices.
OPEC countries continue to limit production
OPEC+ is taking measures to support the oil price. Last week (December 5), the decision was made to continue the production cuts for a longer period, as expected. From April 2025, oil production will slowly increase. However, it is noted that this decision can be paused or reversed, depending on market conditions. The cut of 2,2 million barrels per day for Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman has been extended until March 2025. From then on, the cut will be phased out until the end of September 2026. The production cut of 1,65 million barrels per day for other OPEC+ countries will remain in place throughout 2026.
Global demand is still low and the oil cartel is trying to support the price by creating shortages. In the monthly report for December, published yesterday (December 11), OPEC revised downwards the growth of global oil demand for 2024 and 2025 for the fifth month in a row. For 2024 by 210.000 barrels per day to 1,6 million barrels per day (year-on-year) and for 2025 by 90.000 barrels per day to 1,4 million per day (year-on-year).
Bottom under oil price
The US Energy Agency (EIA) predicts in a forecast published this week that oil production will increase by 2025 million barrels per day in 1,6, with almost 90% of that growth coming from countries not affiliated with OPEC+. The agency expects the price of Brent crude next year to average around this year's price, or $74 per barrel. Several analysts expect a tighter supply after the oil cartel's announced extension of production cuts, putting a floor under the oil price of $70 per barrel.
Diesel
Diesel has dropped slightly in price, from €130,20 last week to €129,60 per 100 litres.