Oil has climbed to around $85 per barrel, reaching its highest level since November of last year. The move follows the International Energy Agency’s (IEA) report that flagged a small deficit in the market after lifting its global demand forecast. Brent crude, the European benchmark, trades near its highest level since early November and has risen about 10% so far in 2024. West Texas Intermediate (WTI), the U.S. gauge, advanced to roughly $80.50 a barrel, a one-week peak, marking an overall gain of around 12% year-to-date.
The rise comes as the IEA releases fresh estimates that tighten near-term demand expectations. In its March oil market report, the agency increased its forecast for global crude consumption by 110,000 barrels per day, projecting about 1.3 million bpd for 2023. A key driver is stronger maritime fuel demand due to longer shipping routes around the Cape of Good Hope following disruptions in the Red Sea, where vessel attacks have affected trade flows.
Nevertheless, the IEA notes that oil demand appears to be returning to its historical path, pressured by a softer economic growth outlook. The agency highlights that weaker macro conditions tend to curb oil use, even as efficiency improves and electric vehicle sales rise. It expects consumption growth to remain skewed toward non-OECD markets, even as China’s dominance gradually wanes.
On the supply side, the agency projects global output to rise by about 800,000 barrels per day in 2024, bringing total non-OPEC+ production to around 102.9 mb/d. This outlook includes a downward revision of OPEC+ production, reflecting persistent voluntary cuts. The assessment notes that the market could shift from a surplus to a modest deficit if OPEC+ maintains its voluntary reductions throughout the year. By late 2023, key producers in the alliance—led by Saudi Arabia and Russia—agreed to trim roughly one million bpd for early 2024, underscoring how coordinated supply restraint can influence price trajectories.
As the year unfolds, traders weigh the balance of supply and demand against a backdrop of evolving global economic signals. The IEA’s stance suggests that while demand growth may slow, it remains supported by energy-intensive activities and trade, particularly in regions outside the OECD. At the same time, structural shifts in energy markets, such as improvements in efficiency and the ongoing transition to lower-carbon technologies, will continue to shape the medium- and long-term price landscape. This combination keeps oil markets sensitive to policy shifts, geopolitical developments, and changes in shipping patterns, all of which can flip the near-term outlook between tightness and relief.
Overall, the market outlook remains a balancing act: a modest supply surplus against a backdrop of potential demand resilience and strategic reductions from major producers. Investors and analysts will continue to monitor IEA briefs, OPEC+ actions, and macroeconomic indicators for clues about the next move in crude prices as 2024 progresses.