BofA Raises 2024 Oil Forecasts Due to Tighter Supply and Geopolitical Risks
Bank of America (BofA) Global Research has increased its 2024 Brent and WTI oil price predictions, attributing the rise to mounting geopolitical tensions and the decision by the OPEC+ producer alliance to uphold supply restrictions.
The bank’s revised forecast anticipates Brent and WTI crude prices for this year to average $86 and $81 per barrel, respectively. Additionally, both prices are expected to peak around $95 per barrel during the summer months.
As of 0902 GMT on Wednesday, Brent crude futures were trading at approximately $89 per barrel, while U.S. West Texas Intermediate crude futures were hovering around $85 per barrel. [O/R]
“We now estimate that improving economic growth expectations have helped push global oil markets into a deficit in 2Q24 and 3Q24 of ~450 thousand barrel per day” BofA stated in a research note, which did not include its previous forecasts.
“Geopolitical turmoil has also boosted oil demand via longer trade routes and impacted supply by reducing refining capacity via attacks on Russian energy infrastructure.” said the bank.
On Tuesday, a Ukrainian drone attacked Russia’s third-largest oil refinery, situated roughly 1,300 km (800 miles) away from the front lines. The strike targeted a unit responsible for processing approximately 155,000 barrels of crude oil per day (bpd).
Last month, OPEC+ members, under the leadership of Saudi Arabia and Russia, agreed to extend voluntary oil production cuts of 2.2 million barrels per day (bpd) into the second quarter.
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