After the much-anticipated OPEC+ gathering on Thursday, the consortium surprised many by confirming that Brazil would officially join the alliance in 2024. In a Friday interview, Jean Paul Prates, Petrobras’ CEO, the state-controlled Brazilian oil giant, revealed that while Brazil is set to become an OPEC+ member in January, it won’t be bound by quotas and will abstain from participating in oil production cuts.
In the same meeting, existing OPEC+ oil producers, responsible for over 40% of global oil production, agreed on voluntary output reductions totaling approximately 2.2 million barrels per day for the early months of the next year. Led by Saudi Arabia, which
maintained its existing voluntary cut, this decision caused a 2% drop in global oil prices. Some producers, including Saudi Arabia, indicated that cuts would be gradually reversed after the first quarter, contingent on market conditions.
As of Monday morning, Brent Crude was priced at $77.74 per barrel. Differing opinions exist regarding the potential trajectory of oil prices post the OPEC+ meeting. Russia, aiming for higher oil prices to fund its activities in Ukraine, contrasts with Saudi Arabia, which aims for a stable oil price around $86 per barrel to support its economic diversification away from oil dependence.
Additionally, the International Energy Agency (IEA) forecasts a slowdown in demand growth in 2024 due to advancements in energy efficiency, the expansion of electric vehicle fleets, and the waning effects of the pandemic economic rebound. This is expected to contribute to a moderate overall demand for energy resources.
It’s essential to note the ongoing tensions between Israel and Hamas, marked by renewed hostilities last Friday following a 7-day truce. Despite the conflict, oil prices have generally remained relatively stable. However, concerns arise that if the situation
escalates further, involving oil-producing nations like Iran, there might be a steep increase in oil prices. The World Bank suggests that disruptions to oil supply would be the primary driver of price movements in such a scenario.