Advertisment

OPEC+ Production Cuts Could Propel Oil Prices to $100 in 2024

author-image
Salman Khan
Updated On
New Update
OPEC+ Production Cuts Could Propel Oil Prices to $100 in 2024

The oil industry stands on the precipice of a crucial shift as the world watches the members of OPEC+ and their voluntary production cuts. These cuts, though not formally endorsed by OPEC+, could see oil prices soaring to $100 per barrel in 2024, a projection based on the possibility of an undersupplied market in the first half of 2024.

Advertisment

OPEC+ and The Voluntary Production Cuts

The Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, have not officially endorsed production cuts. However, individual nations within the group have announced voluntary reductions totaling 2.2 million barrels per day for the first quarter of 2024. Saudi Arabia, the largest OPEC member, has made a commitment to extend its voluntary cut of 1 million barrels per day, a measure in place since July, until the end of the first quarter. Other nations, including Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman have also pledged cuts of various dimensions.

The Importance of Full Compliance

Advertisment

The complete adherence of all OPEC+ members is deemed critical to the success of these cuts. The global oil economy hinges on these voluntary initiatives and a united front could signify a pivotal moment in oil price trends. The effectiveness of these cuts relies heavily on the commitment of all involved parties, which, if fulfilled, could lead to a monumental rise in oil prices.

Financial Analysts' Predictions

Analysts from UBS and Goldman Sachs anticipate an escalation in oil prices if these pledged cuts are executed. UBS strategist Giovanni Staunovo predicts a market deficit that could help keep oil prices high, while Goldman Sachs foresees a mechanical boost to Brent December 2024 prices. This could maintain Brent oil prices in the $80-100 range for 2024. At the time of reporting, global benchmark Brent crude futures were trading at $80.66 a barrel, and U.S. West Texas Intermediate crude futures stood at $75.93 per barrel.

In conclusion, the potential shift in oil prices presents a fascinating dynamic in the global financial landscape. The decisions of OPEC+ members could drastically influence the trajectory of oil prices. As we await the unfolding of these events, the world watches with bated breath, anticipating the ripple effects of these decisions on the global economy and the oil industry.

Advertisment
Advertisment