By Anadolu Agency
January 7, 2025 1:17 pmBrent crude oil, which began 2024 at elevated levels due to geopolitical tensions raising concerns over global supply, ended the year lower than its opening price.
Concerns that conflicts in the Middle East could escalate and disrupt oil supplies in the region emerged as the key factor influencing the oil markets in 2024.
Driven by geopolitical risks, Brent crude surged to its highest level since October 2023, reaching $90.66 per barrel on April 4.
Although prices rose at the start of 2024, markets quickly adjusted to the situation. Efforts to broker a ceasefire in the Middle East, home to vast majority of the world’s oil reserves, helped ease supply concerns, contributing to a decline in oil prices.
Accordingly, Brent crude hit its lowest point of the year on September 10, falling more than 3% to close at $69.52 per barrel, marking its first dip below $70 since December 2021.
Brent crude started 2024 at $77.50 per barrel and ended the year at $74.69, marking a 3.6% decline for the year. While West Texas Intermediate (WTI) crude ended the year at $71.55 per barrel, down 0.3%. WTI had started 2024 at $71.77 per barrel.
– China’s weak demand put downward pressure on prices
Weak demand forecasts from China became the key factor influencing oil prices in 2024.
Data showing a slowdown in industrial output, rising unemployment, and falling housing prices in the key driver of global oil demand further fueled concerns over a global supply glut, putting downward pressure on prices.
Following the slowdown, measures announced to revive the region’s economy raised expectations of growth in China’s economy for Q3 and Q4 of 2024. However, these steps proved insufficient.
Moreover, refineries in China reduced gasoline and diesel production in July compared to the same period in 2023, further impacting prices. This production cut came at a time when global demand for these products was expected to rise, reinforcing downward price pressure.
– US elections impact prices
Meanwhile, the potential impact of US President-elect Donald Trump’s economic policies, played a significant role in influencing oil prices.
Trump expressed desire to boost fossil fuel production which fueled expectations that renewable energy investments would decline and oil consumption would rise in the world’s largest oil consumer.
However, while this eased demand concerns and had an upward impact on prices, experts noted that the shift would take time, preventing sharp price increases.
On the other hand, Trump’s pledge to impose a 25% tariff on all products from Mexico and Canada, and a further 10% tariff on those from China, raised concerns that this could drive up prices in the US, reinforcing fears of reduced domestic oil demand and putting downward pressure on oil prices.
– OPEC+ group production revisions
The decision by the OPEC+ group, which consists of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producer, to revise production levels in order to maintain global supply and demand balance also played a crucial role in price movement.
The OPEC+ group’s decision to delay planned production increases and extend production cuts until the end of 2026 supported oil prices throughout the year.
Furthermore, the UAE’s decision to gradually increase its daily production by 300,000 barrels from April 2025 to September 2026 eased supply concerns, helping to balance price increases.
According to OPEC statement, the 38th OPEC and non-OPEC Ministerial Meeting decided that the total production of member countries would reach 39.7 million barrels per day (bpd) in 2025 and 2026. The agreement also outlined that the group would maintain its 2 million bpd production cut until December 31, 2026.
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