Oil Price Forecast: Can Crude Oil Return to $100 in 2024?

The past four years have been one of the most volatile periods for the crude oil market.

A turbulent COVID-19 period in 2020 saw the US crude oil West Texas Intermediate (WTI) briefly touching negative prices, according to the US Energy Information Agency (EIA). The international crude oil benchmark Brent fell to its lowest in decades at $9.12 as travel restrictions knocked down demand.

In the following years, as the COVID eased and governments lifted travel restrictions, oil price gradually recouped their losses from the pandemic, surging to multi-year highs. Both Brent and WTI jumped to more than $110 in Q1 2022 when Russia attacked Ukraine in late February. In 2022, Brent climbed more than 10%, while WTI grew about 7%.

Since reaching multi-year highs in Q1 2022, oil prices have gradually retreated. Slowing economic growth, with looming recession due to central banks’ aggressive interest rate hikes to tame decades-high inflation, has capped oil prices.

Crude oil prices fell more than 10% in 2023, virtually giving up their previous gains.

Brent vs. WTI Crude Oil Price Performance Chart
Brent vs. WTI Crude Oil Price Performance Chart. Source: TradingEconomics

So, what’s in store for oil prices this year? Let’s dive into our oil price forecast.

Key Takeaways

  • Subdued economic growth outweighs potential price gain from geopolitical tensions.
  • The Fed’s rate-cutting cycle could spur higher demand growth.
  • OPEC+ continues to play a crucial role in regulating crude oil supply in the foreseeable future.
  • Russia-Ukraine and Hamas-Israel wars remain a tailwind for oil prices.
  • In the long run, increasing usage of EVs can reduce oil demand.

Oil Price Predictions Summary

Year Forecast Range Key Factors
2024 Below $70 to $90 • OPEC+ output cut
• Wars: Hamas-Israel, Russia-Ukraine
• Global economic slowdown
• The Fed’s rate cut
2025 $79 to $105 • Fed continues the rate-cutting cycle
• OPEC+ supply control policy
• Demand recovery
2026-2030
  • $60 to $80
  • General sentiment: neutral to bearish
• Wider adoption of EV
• De-dollarization
• OPEC+ role to regulate supply
• Environmental rules against the oil industry

Oil Price in 2023: Calm After the Storm

After a wild roller-coaster in 2022, oil prices were relatively calm over 2023 though there were still spikes along the way.

Continuing import ban on Russia’s crude oil and products by the European Union and the US in response to Russia’s aggression had supported oil prices. However, Russian oil managed to find its way to markets despite the ban, mostly going to China and India, according to Reuters.

On the other hand, several global central banks, particularly the Federal Reserve, showed little signs of ending their interest rate hike cycle since inflation rates in many developed nations remained high. Concerns abound that the rate hike cycle would spark a recession, consequently denting oil demand.

Despite the pressure on demand from the looming recession, oil prices had managed to stay elevated above $80/bbl throughout the year. OPEC+’s role in managing supplies inevitably supported oil prices in 2023.

On June 4, 2023, OPEC+, which groups 13 members of the Organization of Petroleum Exporting Countries (OPEC) and allies led by Russia, agreed to extend a 3.66 million barrels per day (bpd) production cut by another year to the end of 2024. In addition to the OPEC+ cut, Saudi Arabia announced an extra one million bpd voluntary cut starting in July 2023, which could be extended.

In September 2023, Brent rallied to $97.69, and WTI surged to the $95/bbl level, the highest price of the year after Saudi Arabia decided to extend its voluntary production cut of one million barrels until the end of 2023. The decision kept production from the world’s second-biggest oil producer to 9 million bbl for the remaining second half of 2023.

Oil Production From OPEC+
Oil Production From OPEC+. Source: EIA

A month later, on October 7, 2023, the Palestinian militant group Hamas launched a surprise attack on Israel, providing upward momentum for oil prices. In a couple of weeks after the attack, oil prices had climbed to above $90/bbl as it sparked concerns about supply disruptions in the Middle East if the hostilities escalated and more oil-producing countries in the region jumped in.

Still, Brent averaged $82.16/bbl over 2023, dropping nearly 17% from the 2022 average of $98.96/bbl. Meanwhile, WTI averaged $77.57 in 2023, falling roughly 21.6% from an average of $94.35 in 2022.

Oil Prices Analysis: Key Drivers in 2024

Oil and other commodity prices rose in the last few weeks of 2023 on hints that the Fed’s rate hikes might have peaked and that a rate-cutting cycle could begin as early as March 2024.

The optimism buoyed oil prices into 2024, but it was short-lived because major US economic data revealed that inflation remained above the Fed’s 2% objective. It raised concerns that the US central bank would not be in a hurry to lower interest rates.

However, worries that the Israel-Hamas war may spread to other countries in the region have stifled any decline and kept oil prices elevated.

At the time of writing on March 6, WTI was trading at around $78 per barrel, gaining nearly 9% so far this year. Brent was trading at $82/bbl level, increasing 6.48% year-to-date.

Brent vs. WTI Crude Oil Year-to-Date Performance Chart
Brent vs. WTI Crude Oil Year-to-Date Performance Chart. Source: Trading Economics

Before we explore the oil price forecast for this year and beyond, we look into some key drivers in 2024.

Geopolitical Tensions

Geopolitical tensions are expected to remain the main drivers of oil prices in 2024, with the war in Ukraine showing no sign of ending and the Israel-Hamas conflict already in its fifth month.

The Israel-Hamas war so far has not affected the region’s oil supplies. Attacks by Yemen’s Houthi rebels on shipping activities in the Red Sea, purportedly in support of Palestinians in Gaza, raised fears about oil supply via the route, but many shipping companies have redirected their cargoes around Africa and the Cape of Good Hope. However, the detour has resulted in greater shipping costs and trip time, which Offshore Technology estimates will add seven to 20 days.

ANZ Research analysts Daniel Hynes and Soni Kumari wrote in a note on February 29:

“The Israel-Hamas war has not affected fundamentals in the crude oil market, but it has increased the risk of supply disruptions, even though the market isn’t pricing them in. We expect it to underpin volatility in oil prices amid the uncertain economic backdrop.”

While the Middle East tensions have little impact on the market, they are likely to continue this year.

Osama Rizvi, Energy and Economic analyst at Primary Vision Network, told Techopedia:

“Unfortunately, the chances of these tensions fading away in the near future are not bright.”

As for the Russia-Ukraine war, Hynes and Kumari expected the US could further tighten its sanctions against Russia. Since the US first banned Russia’s energy exports in March 2022, the country has expanded the sanctions to include financial institutions and individuals working in various Russia’s economic sectors.

OPEC+ oil production cut

At a meeting on March 3, several OPEC+ nations agreed to extend additional voluntary cuts of 2.2 million bpd for the second quarter of 2024. The cut will be in addition to a voluntary cut of 471,000 bpd for the same quarter announced by Russia, OPEC wrote in its statement.

ANZ Research’s Hynes and Kumari said on March 5:

“We think the extension of OPEC’s voluntary output cut agreement will keep the market tight in Q2. Demand looks supportive as rebounding margins encourage refiners to increase oil processing ahead of seasonal demand.”

Nonetheless, they expected a drop in both non-OPEC oil supply and seasonal demand would rebalance the market in the second half of this year. ANZ Research projected that oil supply for non-OPEC members could only grow by one mb/d in 2024, slowing from a 2.1 mb/d rise in 2023, partly due to declining drilling activity in US shale oil.

Will OPEC+ pivot from its output cut policy?

Lukman Leong, a Jakarta-based independent analyst, expected OPEC+ to end cutting production in 2025 when demand is projected to pick up.

Leong told Techopedia:

“OPEC+ learned their lesson from the COVID-19 crisis when the price collapsed and then climbed again. It is already content with the current policy. So, rather than selling more at cheaper prices, they prefer to sell just enough at higher and more stable prices.”

Global Economic Slowdown

The global economic outlook is yet to show signs of meaningful recovery. Already, Germany anticipated a technical recession after reporting its real gross domestic product (GDP) shrank by 0.3% seasonally adjusted in Q4 2023.

Japan unexpectedly slipped into recession after the government data showed that the country’s GDP shrank in two consecutive quarters in the October to December 2023 period, Japan Times reported.

Softening economic growth might reduce demand, offsetting the possible price increase from geopolitical fears and OPEC+ production cuts.

Primary Vision Network’s Rizvi said:

“The fact that geopolitical tensions have not been able to cause a panic in the oil markets in particular and commodity markets, in general, is because these events are happening at the same time when the global economy is undergoing a period of slowdown.”

Overall, the International Monetary Fund (IMF) forecasts that global economic growth will remain at 3.1% in 2024 and improve slightly to 3.2% in 2025, as higher central bank rates and a withdrawal of fiscal support amid high debt weigh on economic activity.

Anticipating the Fed’s rate-cutting cycle

At the last meeting for 2023 on 13 December, the Federal Open Market Committee (FOMC) decided to keep the Federal Fund Rate, the benchmark interest rate, at 5.25% to 5.5% while hinting that there was a possibility to lower the rate in 2024.

Since then, investors had expected the Fed to lower rates as early as March. Their hopes were dashed, however, when January inflation and employment figures came in stronger than predicted. Lower interest rates normally boost economic growth, which leads to increased energy consumption.

The minutes of FOMC’s first meeting on January 31, 2024, confirmed the sentiment. At the meeting, participants agreed the monetary tightening is likely near its peak. However, they did not expect that it would be appropriate to reduce the target range until they had gained greater confidence that inflation was moving sustainably toward 2%.

Currently, analysts have priced in May or June as the start of the Fed’s rate-cutting cycle.

Oil Price Forecast 2024

Analyst/Source Oil Price Forecast 2024
Osama Rizvi $70
Lukman Leong $70-$85
ANZ Research $85-$90
US Energy Information Agency (EIA) $82
Dutch bank ING $82
Fitch Ratings Brent: $80
WTI: $75

So, what are the oil price predictions for this year after considering all main drivers?

Rizvi of Primary Vision Network saw oil prices heading towards lower $70s for Brent and below $70 for WTI if a global recession materializes. He said:

“For 2024, I see the global economic indicators will continue to show an impending recession or at least a slowdown. This would mean that the market sentiment will remain bearish, overall.”

ANZ Research’s Hynes and Kumari, in their oil price forecast 2024 on March 5, saw the price of oil to trade higher at between $85 to $90, supported by OPEC+ output cuts and geopolitical tension.

Lukman Leong expected oil prices to trade between $70 to $85/bbl.

“In the first half, oil could range between $70 to $80 in the first half and could trade higher at $75-$85/bbl in the second half,” said Leong, adding that the start of Fed’s rate-cutting cycle could provide a boost to prices in H2.

In its short-term energy outlook released in February, the US Energy Information Agency (EIA) predicted Brent spot crude price to reach $82/bbl in 2024, unchanged from 2023.

EIA said:

“Although we expect crude oil prices will rise into the mid-$80/b range in the coming

months, we expect downward price pressures will emerge in 2Q24 as global oil inventories generally increase through the rest of our forecast. However, ongoing risks of supply disruptions in the Middle East create the potential for crude oil prices to be higher than our forecast.”

Dutch bank ING, in its oil price forecast 2024 updated on March 1, also projected Brent oil to stay at $82/bbl in 2024, unchanged from 2023.

In December 2023, Fitch Ratings revised its oil price assumptions for 2024 on the back of OPEC+ continued production cuts. In the latest forecast, the rating agency increased the Brent oil price estimate for 2024 to $80/bbl from $75, but it was lower than $82/bbl in 2023. It raised the WTI price forecast to $75 from $70/bbl.

Oil Price Forecast 2025

Analyst/Source Oil Price Forecast 2025
Lukman Leong Up to $105
ING $80
US Energy Information Agency (EIA) $79
ANZ Research WTI: $90
Brent: $92

For 2025, Rizvi projected economic problems from 2024 would continue.

“We will have to look at the monetary policy of major central banks, global debt levels (which are at their highest point at the moment i.e. $313 trillion),” said Rizvi without giving the exact numbers for the oil price forecast.

Other factors that could affect oil prices, Rizvi said, include US oil production, the new rules to control methane emission from oil and gas operations released by the US Environmental Protection Agency (EPA) in December 2023, Europe’s economic health, and the US-China trade war.

ING and EIA, in their oil price forecast for 2025, predicted a decline in Brent oil prices. ING anticipated that Brent would decrease to $80/bbl by 2025, whereas the EIA predicted an average of $79/bbl.

EIA noted:

“After a period of relatively balanced markets during the rest of 2024, we forecast the market will gradually return to moderate inventory builds in 2025 as slowing growth in oil demand is again outpaced by increasing oil production growth.”

In contrast, Lukman Leong and ANZ Research were more upbeat, estimating oil prices to increase in 2025.

Leong expected oil prices could rise to as high as $105/bbl in 2025 if OPEC+ maintains its supply cut policy.

“In addition, a bigger rate-cutting cycle in 2025 could also bode well for the economy and oil price,” he said.

Similarly, ANZ Research expected WTI and Brent to rise to $90/bbl and $92, respectively in 2025, from an estimated $83 and $86 in 2024.

Oil Price Forecast 2026-2030 and Beyond

Analyst/Source Oil Price Forecast 2026-2030
Osama Rizvi $60-$80
Peter Garnry – Saxo Bank Potential decline due to EV adoption
Fitch Ratings Brent: $65
WTI: $60

How will oil prices perform in the long term?

Primary Vision’s Rizvi projected oil prices could reach between $60 and $80 per barrel depending on how strict the rules against the industry are and the pathway that the developing countries choose to become more energy independent. He explained:

“For instance, we have EPAs new Methan Emission standards coming out soon. That can, among other things, directly impact U.S. oil production, therefore, affecting global oil supply and as a function of that prices.”

Furthermore, Rizvi highlighted the importance of monitoring energy policy in developing countries, particularly Asia, which, according to the Economist Intelligence Unit, will account for 60% of global economic growth in 2040. He said:

“Developing countries will be the ones that will drive energy demand moving forward. Therefore it is of vital importance to observe the policy changes happening in this region vis a vis the adoption of renewable energies and how long are the leaders and other stakeholders willing to use oil and gas.”

Lukman Leong, meanwhile, did not make an oil price forecast for 2030 due to numerous unknown factors that could challenge predicting prices over such a long period.

“We never know whether another war will break out in the future. Oil prices are the most volatile of all commodities, even when compared with stocks,” he said.

Nonetheless, Leong predicted the widespread adoption of electric vehicles, along with greater efforts for energy transition, will reduce oil consumption in the long run. He said:

“In 2030, crude oil consumption will start to decline because of EVs, and that will hurt oil prices.”

Echoing Leong’s projection, Peter Garnry, Head of Equity Strategy at Danish bank Saxo Bank, said in a note on March 3 that a cumulative delivery of 14.5 million Battery Electric Vehicles (BEVs) since Q1 2020 has lowered oil demand by 0.4 million barrels per day (Mb/d).

While the EV demand is still tiny compared to a global demand of 100 Mb/d now, Garnry said the cumulative oil demand reduction could reach 1 Mb/d by Q4 2025.

“With Wright’s Law in place and also the economics of scale production costs will continue to fall for EVs and in a few years from now it will not make sense for consumers in developed countries to buy a gasoline car over BEV unless there are specific needs to consider.”

Fitch Ratings expected Brent to trade at $65 and WTI at $60 in 2026, but it did not provide reasons for the oil price predictions beyond 2026.

The Bottom Line

Oil prices are likely to see a tug-of-war between multiple forces, limiting possible gains. On the one hand, geopolitical concerns, OPEC+ strict control of supply, and a possible end of central banks’ interest rate policies might keep oil prices high. On the other hand, a sluggish global economic recovery could reduce demand.

In the long run, the energy transition drive combined with the increased use of EVs may chip away demand for crude oil.

Do your own research and always remember your investment decision depends on your attitude to risk, your expertise in the commodity market, the spread of your portfolio, and how comfortable you feel about losing money.

The information in this guide does not constitute investment advice and is meant for informational purposes only.

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Fitri Wulandari
Financial Journalist

Fitri has over 20 years of experience in financial journalism. She has contributed to various international media outlets, including Dow Jones Newswires, Bloomberg, and Reuters, before joining Techopedia. She spent the first 15 years of her career covering commodity and energy news, later transitioning to general financial writing. These days, she conducts interviews with industry players and analysts and reports on international conferences. Fitri holds a degree in International Relations, supporting her expertise in financial journalism. She occasionally serves as a guest trainer for journalistic training and as a moderator for panel discussions.