Slow global economic growth will keep crude prices anchored below $90 a barrel this year and next, unless the Israel-Hamas conflict draws in more countries in the Middle East and exacerbates supply tightness, a Reuters poll showed on Tuesday.
A survey of 40 economists and analysts forecast Brent crude LCOc1 would average $84.80 a barrel this year, and $86.62 in 2024, little changed from estimates of $84.09 and $86.45 projected in September.
The global benchmark Brent crude has averaged around $82.60 a barrel so far this year.
U.S. crude CLc1 forecasts were also a tad higher at $80.32 a barrel for 2023 and $83.02 next year, from the $79.64 and $82.99 consensus last month.
“The major drivers will continue to be geopolitics and the extent of economic growth,” said John Paisie, president of Stratas Advisors.
If the Middle East situation spins out of control, the price of Brent crude will likely test $115 or higher if there is a disruption to oil supply, Paisie added.
Military clashes between Israel and Hamas ignited fears that a wider conflict could hit supply from the Middle East, the world’s biggest oil-supplying region. So far, the impact has been limited as Israel is not a big producer.
“If the U.S. were to conclude Iran played a significant role in the Hamas’ attack, this could lead it to greater enforcement of sanctions on Iran’s oil exports. Given the current crude market tightness, this could lead to prices spiking above $100,” Capital Economics’ Bill Weatherburn said.
Most poll respondents do not see oil holding above $100 per barrel for a prolonged period of time as recessionary pressures loom large.
On the supply side, Saudi Arabia and Russia said they would continue with their voluntary output cuts until the end of 2023, keeping the market tight and supporting oil prices.
“The Saudi output cuts will eventually cease, and supplies should tighten less than feared in parts due to stagnant demand,” said Julius Baer analyst Norbert Rücker.
Global oil demand was expected to increase by about 1.5-2.2 million barrels per day (bpd) in 2023 and by 1-2 million bpd in 2024, led by China and India.
Source: Reuters (Reporting by Brijesh Patel and Daksh Grover in Bengaluru, additional reporting by Harshit Verma and Swati Verma; Editing by Susan Fenton)