Crude Oil Market and Situations in 2023 In 2023, the average global price of Dubai crude stood at USD 82.1 per barrel, a decrease of USD 14.24 compared to 2022. The market initially anticipated a significant increase in oil demand with China reopening its borders after COVID-19 isolation, but this expectation did not materialize. China’s prolonged real estate crisis continued to exert pressure on the broader economy. Concerns lingered over the collapse of SVB, First Republic, and Signature banks, raising fears of a potential financial crisis. Meanwhile, the Federal Reserve raised and maintained high-interest rates, reaching 5.25-5.50% by the end of 2023, aimed at controlling inflation. This policy put pressure on the economy and commodity prices. In an effort to stabilize oil prices, OPEC+ implemented production cuts, with Saudi Arabia voluntarily reducing output by 1 million barrels per day starting July 2023. The outbreak of the Israel-Hamas war on October 7, 2023, had a brief yet impactful effect on the market. Although the incident did not spread, it resulted in the fluctuation of crude oil prices in Q4 of 2023. Crude Oil Price Forecast for 2024 The Dubai crude oil price is expected to move within the USD 75-85 per barrel range, projecting a modest increase in global oil demand of approximately 1.5 million barrels per day compared to 2023. China’s economic recovery remains hampered by the ongoing property crunch, contributing to the overall moderation in oil demand. The Gross Refining Margin (GRM) is expected to decline in comparison to 2023 due to new refineries coming online at end of 2023. These include Kuwait’s Al-Zour with a capacity of 570,000 barrels per day, Oman’s Duqm at 230,000 barrels per day, and China’s Hebei at 160,000 barrels per day. Simultaneously, the supply from non-OPEC+ producers is projected to increase by over 6 million barrels per day in 2024, resulting in a surplus in the global oil market. This surplus complicates the OPEC+ oil output cut strategy. A critical factor to monitor for potential impact on crude oil prices is the Fed’s forthcoming decisions on interest rates. Easing of the benchmark rate is expected to stimulate economic expansion, consequently increasing oil demand to some extent. However, the US oil output currently at 13.1 million barrels per day will continue to put pressure on oil prices. Additionally, conflicts in the Middle East continue to pose a significant supply risk factor. Market Overview and Industry Outlook 75 Structure and Business Operations of IRPC 56-1 ONE REPORT 2023
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