The oil price rose again last week. The fact that OPEC+ is pumping less oil is supporting the price. Biden also plans to impose further sanctions on Russian oil tankers before he leaves office as president. Winter weather is also helping. Nevertheless, analysts remain convinced that the average oil price this year will be lower than in 2024.
The price of a barrel of Brent crude oil is currently at $8 at the time of writing (Wednesday afternoon, January 77,15). That is the highest since mid-October. Last Thursday, oil was trading at $75,93 a barrel. The most recent low was December 6, when oil was trading at $71,12 a barrel.
The oil price is supported by, among other things, the production restrictions that the OPEC+ countries have imposed on themselves. The oil production of OPEC+ fell in December after two months in a row of higher production, according to research by Reuters. The United Arab Emirates in particular produced less due to maintenance of the oil fields. Iran also pumped less oil. This compensated for the increase in production in Nigeria, among others. According to Reuters, OPEC pumped 26,46 million barrels per day in December, which is 50.000 barrels per day less than in November.
In addition, Reuters reports, citing sources, that Joe Biden plans to impose additional sanctions on Russia before his term ends, targeting oil revenues, because of the war in Ukraine. Sanctions would be imposed on tankers carrying oil sold above $60 a barrel.
Furthermore, US crude oil inventories have fallen, which analysts say could indicate increased energy demand due to the severe winter in the US and some places in Europe and Asia.
Oil price range not this small in more than 20 years
The lowest oil price in 2024 was $69,19 a barrel on Sept. 10, while the highest price was $91,17 on April 5. According to the U.S. Energy Agency (EIA), the inflation-adjusted range within which Brent crude has traded annually is the narrowest it has been in more than two decades. The average price for Brent crude in 2024 was $80, down $2 from 2023, the EIA said. Increased production and slowing demand growth have put pressure on prices in 2024, the EIA said. Meanwhile, geopolitical risks and voluntary production cuts by OPEC+ members have supported prices.
According to analysts, the chance remains high that we will be below the current oil price of over $77 per barrel more often this year than above it. According to the Bank of America, Brent oil will cost an average of $65 per barrel this year, about $15 less than last year. This is despite production cuts by the OPEC+ countries. This is reported by Bloomberg based on what a representative of the commercial bank told reporters this week. Analysts have previously predicted that oil will fall well below $70 this year, and may even go towards $60 later this year, but an average of $65 is very low. In December, the EIA predicted in its most recent monthly outlook that the average Brent oil price will be $2025 in 74. A month earlier, it was still assuming $76. Fitch Group is sticking to its forecast of an average of $76 per barrel in 2025.
The growth in oil production by non-OPEC countries (Brazil, Canada, Guyana and Norway) is greater than the growth in oil demand. The bank expects that the oil cartel will therefore continue to restrict production and notes that compliance with the quotas is no longer being taken so seriously by every country. Although Donald Trump, who will be sworn in in a week and a half, announced during his campaign that he would increase oil production, the Bank of America expects only a slight increase in American oil production.
Diesel price slightly lower
Diesel is currently (January 131,32) trading for slightly less than a week ago at €100 per 8 liters. On Friday January 3, the price was €131,77.