The oil sector continues to be a focal point of the global economy, influenced by a list of dynamic factors that shape prices and shape future prospects. Recent months have seen significant changes in oil prices, reflecting changes in supply, demand and other evolving geopolitical aspects.
During the recent period, the oil market has witnessed a gradual recovery in prices, driven by a wide list of emerging factors. Increased demand for fuels, especially in developing economies, is contributing to this growth, while the resumption of industrial activity and the expansion of travel is stimulating the need for oil.
However, the transition to renewable energies remains a key trend influencing the oil market. Governments and companies are increasingly focused on reducing carbon emissions and diversifying their energy sources, which can impact the demand for oil in the long term. The growing emphasis on environmental policies and investments in clean technologies is encouraging the search for alternatives to oil, generating uncertainty about future demand.
Another aspect to consider is geopolitical events, which continue to play a significant role in determining oil prices. Regional tensions, changes in the policies of major producers and unforeseen events are managing volatility in the market and influencing investment decisions.
Based on the above, the oil sector is expected to face significant challenges as it adapts to a rapidly changing environment. The transition to renewable energies, while posing a threat to oil demand, also presents opportunities for innovation and diversification. Companies that can strategically position themselves to deal with these changes and invest in sustainable technologies will be better prepared to face the challenges of the future.
As the oil sector continues to evolve in response to global trends, careful analysis and strategic adaptation are essential for all market participants. The transition to renewable energy, coupled with ongoing geopolitical pressures, will require a flexible and innovative approach to ensure long-term success.
Is demand for commodities expected to fall?
This year has seen a significant increase in demand for oil, with an increase of around 2.5 million barrels per day compared to the previous year, equivalent to annual growth of 2.3%. Next year, demand is expected to exceed 0.7 million barrels per day. Despite OPEC’s optimistic outlook, which predicts consumption of 2.4 million barrels a day for 2024, China remains the main driver of this demand. In view of China’s modest growth, further stimulus measures are expected to be implemented in order to achieve the 5% growth target.
Investor sentiment
There is a pessimistic trend towards oil, making room for potential price increases in the event of production interruptions, geopolitical tensions or additional cuts by Saudi Arabia. Investors should anticipate maintaining Saudi production cuts at 1 million barrels per day during the first half of 2024, with possible reductions to half a million barrels in the second half.
The prospect of maintaining current OPEC+ production levels in the first quarter of 2024 is seen as viable, which could help balance the market and keep prices around US$80.
