More OPEC cuts, a US production boom, and a market share war: Here’s what oil markets are anticipating in 2024

Experts think the US shale drilling boom will continue, boosting the world’s supply of oil.

Reuters

The oil market could see big shifts into 2024, analysts have warned.
Experts think the US shale drilling boom will continue, boosting the world’s supply of oil.
But oil prices risk more upside as OPEC looks poised to slash production further.

Oil markets could see more big shifts into 2024 as supply concerns run on in the industry, experts have warned.

Crude prices have seen a wild year so far, with Brent crude, the international benchmark, having fallen around 35% from its highs last summer. That’s largely because US oil production has continued to boom, notching a new record in September. 

Markets, though, could see some big shifts coming next year, particularly as Middle Eastern producers try to claw back more of their market share. Demand, meanwhile, remains uncertain, particularly as big energy consumers like China deal with slowing economic activity.

Here are four big things experts are eyeing for oil in 2024:

OPEC production cuts

The cartel has vowed to slash its crude production 2.2 million barrels a day in the first quarter of next year. And top members have said those cuts could be extended deeper into next year.

OPEC+ has already slashed its production multiple times over the past year in a bid to prop up oil prices. But markets have shrugged off the supply cuts, in a possible a sign that OPEC’s control over the oil market could be fading.

That’s as more non-OPEC supplies fill in the gaps. In fact, Goldman Sachs recently lowered its Brent crude price forecast for 2024 to account for booming US production.

US oil boom

Domestic production will average 13.3 million barrels a day next year, according to Rapidan Energy. That’s up from this year’s average of around 13 million barrels a day. 

Major energy giants, like Exxon Mobil and Chevron, have already ramped up their capital expenditure budgets with the intention of stepping up their production next year. 

Meanwhile, a record $100 billion of mergers have taken place in the Permian Basin this year, according to consulting firm Wood Mackenzie, a sign that firms see oil being a critical source of energy over the long run.

Market share war

Saudi Arabia could end up flushing the oil market with supply in a bid to send oil prices crashing. That swing could force US producers to pull back and surrender some market share.

“You’ve got to attack the guy that’s making the marginal decision to drill or not — and that guy is Mr. Permian Basin,” energy expert Paul Sankey told Business Insider in a recent interview.

As the US ramped up its shale production, OPEC’s total share of the crude market fell to 51%, its lowest in nearly a decade, according to International Energy Agency data.

But some strategists say that scenario is unlikely. Goldman Sachs said it didn’t expect Saudi Arabia to flush the oil market.

Oil demand

The world’s oil demand is bound to grow in 2024, though at a slower pace than it has in previous years, according to the US Energy Information Agency. Demand is forecasted to rise by 1.3 million barrels per day next year, slightly lower than the 1.8 million barrels per day oil demand is expected to have grown in 2023.

Much of that will be driven by China, where crude demand is expected to improve into next year.

Over the longer term, oil demand is likely to improve over the next decade, a Kpler analyst told Business Insider.  And JPMorgan’s chief energy strategist estimated that the world wouldn’t see peak oil demand “in this lifetime.” 

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