Oil prices could rise as high as $100 a barrel by the end of the year from about the mid $80s at present, depending on how the Organization of Exporting Countries (OPEC), and particularly Saudi Arabia, responds to market conditions with lower than expected demand from China. Saudi Arabia voluntarily cut oil prices by about a million barrels per day in July and is continuing that reduction through September to keep prices up as China’s anticipated oil demand has not materialized. China is undergoing deflation and in July both its exports and imports have been reduced by double digits. Even the International Energy Agency indicated OPEC+ (OPEC and its allies including Russia) supply cuts could erode inventories in the rest of this year, potentially driving oil prices even higher. Tighter supply driven by oil output cuts from OPEC and its allies and Western policies against oil and gas production as well as rising global demand have underpinned a rally in oil prices, with Brent oil hitting highs of over $88 a barrel on August 10, the highest since January. If OPEC+ current targets are maintained, oil inventories could draw by 2.2 and 1.2 million barrels per day, respectively, in the third and fourth quarters, which would drive prices higher.

OPEC and its allies (OPEC+) began limiting oil supplies in late 2022 to bolster the market and in June extended those supply cuts into 2024. In July, global oil supply dropped by 910,000 barrels per day in part due to a sharp reduction in Saudi output, while Russian oil exports held steady at around 7.3 million barrels per day. Saudi Arabia cut output by 943,000 barrels per day in July to 9.013 million barrels per day, delivering on its promise to lower July production by 1 million barrels per day. The pledge has been extended twice to include August and September.

OPEC+ is cutting production to keep prices up due to uncertainty in oil demand growth. The International Energy Agency (IEA) expects oil demand to increase by 2.2 million barrels per day in 2023 to 102.2 million barrels per day, due to increased summer air travel, increased oil use in power generation and rising petrochemical activity by China–the world’s top oil importer and the world’s largest exporter and consumer of petrochemicals. China is expected to account for more than 70 percent of the growth in oil demand, despite concerns about its economic health. OPEC’s oil demand expectations are slightly higher with an increase of 2.44 million barrels per day in 2023.

For 2024, however, the oil demand forecast disparity is much larger. The IEA’s demand growth forecast for 2024 is 1 million barrels per day, lowered by 150,000 barrels per day from its previous month’s forecast, contrasting with OPEC’s forecast that oil demand will increase by 2.25 million barrels per day in 2024. OPEC expects “solid” economic growth amid continued improvements in China to boost oil consumption in 2024.  The U.S. Energy Information Administration forecast is in between the two, with an expected increase of 1.6 million barrels per day in 2024.

According to the IEA, “The global economic outlook remains challenging in the face of soaring interest rates and tighter bank credit, squeezing businesses that are already having to cope with sluggish manufacturing and trade.”

Also affecting the price uncertainty is that exports of Nigeria’s Forcados oil resumed recently, roughly a month after loadings of the medium sweet grade were suspended because of a potential leak at the export terminal. The suspension contributed to Nigeria becoming the second-biggest contributor to the drop in OPEC oil output in July. Exports of the grade, which were scheduled to ship 220,000 barrels per day in July, were halted on the evening of July 12 after workers saw fumes near a single buoy mooring where oil was being loaded onto a vessel.


Oil prices have been steadily increasing in recent weeks due to OPEC’s decision to reduce production overall and due to President Biden’s anti-oil policies, which have removed the United States as the swing supplier and given OPEC control of the market. Also affecting the oil market is demand, particularly from China–the world’s second-largest economy and biggest oil importer–which is continuing to report poor economic news and lower increases in oil consumption than originally expected. Saudi Arabia, with its voluntary production cuts has been able to keep supply constrained enough to maintain prices in the $80-per-barrel range. But, some forecasters see oil prices rising to the $100-per-barrel territory by year-end if OPEC’s supply cuts continue and oil demand becomes robust.

Supply and demand is the determiner of oil prices and uncertainties remain, including China’s demand recovery after COVID lockdowns, the war in Ukraine, reductions in global production, a lack of investment and the Biden administration’s discouragement in U.S. oil production, despite U.S. oil production being at an all-time high. Higher demand and less supply generally results in price increases.

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