Appearances are deceiving. An example: the price of oil in 2024. He seems to have been particularly wise. Over the first 10 months of the year, Brent averaged nearly $82 per barrel, approximately one dollar below its 2023 level. Without taking any risk, it is possible to say that It should fall by around 1% over the whole year. On the other hand, it is much more complicated to determine where the price of black gold will be in 2025, or even simply at the end of 2024, as its volatility is significant and escapes the simple confrontation of supply and demand. The unfolding of the 2024 film provides further proof of this.
Roller coaster
The year began with production cuts by OPEC member countries and their allies amid a renewed rise in tensions in the Middle East. The epilogue of this first phase, the launch of a drone and missile attack by Iran against Israel at the beginning of April: the bar of 90 dollars per barrel is crossed, that of 95 is getting closer, that of 100 is not only a matter of time. But no, the blow falls violently and the barrel is on the verge of breaking the floor of 75 dollars at the beginning of June. The overdetermining element: the concern surrounding global growth, particularly Chinese growth, raises fears of a decline in oil demand. Especially since on the other hand, American crude production is accelerating again with that of Canada, Brazil and Guyana. New change in trend as summer approaches, prices are rising in particular because OPEC+, going against the planned agenda, decides to maintain its quotas. Then the roller coaster resumes, with OPEC meetings, geopolitical tensions and supply fears. Latest episode to date, Israeli reprisals on Iranian territory on the night of October 25 and 26. By avoiding strikes on oil and nuclear infrastructure, the pressure put on prices was nevertheless limited and temporary. Escalation has been avoided, but the situation can degenerate at the slightest spark.
Future forecasts and uncertainties
In this context, what are the certainties for 2025? On the supply side, the direction is upwards. The quota for OPEC+ countries should gradually be reduced and production from non-member countries of the organization should continue to increase. In addition, after years of decline, investments in new extraction capacities have started to rise again. In the long term, the potential for supply growth may be limited, but production will not collapse anytime soon.
On the demand side, the trend is also upward, the stagnation of consumption in OECD countries being offset by that coming from elsewhere, from emerging countries, notably China despite the rise of electric mobility and the shift progressive energy mix from oil to gas and renewable energies. As for Western countries, the timetable for phasing out fossil fuels is utopian to say the least.
The outcome of these two forces is a market that will find itself in excess supply in 2025, unless events, by nature unpredictable, change the situation: blockade by the Iranians of the Strait of Hormuz where transit 20 to 30% of global crude consumption, attacks on oil sites, the field of possibilities is immense. Historically, the price of natural gas follows that of oil, due to the fact that it is often a by-product of oil extraction. The development of wholesale natural gas markets and the consequences of the conflict in Ukraine have weakened the link but it has not disappeared and should partly tighten. But whether it is oil or gas, anticipating future prices is more of a gamble than a forecast based on models, however complex they may be.
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