2024-01-19 01:00:19
The risks of disruption to oil flows are high, but offset by supply which is expected to reach a record level this year, according to the latest report from the International Energy Agency (IEA). A form of balance which results in prices which have, in recent times, moved relatively little.
Geopolitical tensions have so far not destabilized the markets, whether the conflict between Israel and Hamas, which has lasted for more than three months, or the attacks perpetrated in recent weeks by the Houthis in the Red Sea. “ As long as a real disruption in supply is not observed, the market is content to shudder », summarizes an expert.
The International Energy Agency discusses in its latest published report Thursday January 18 a “ physical balance “. In other words, the constraints imposed by the current international context are for the moment offset by news which is pulling prices down.
A well-supplied market in 2024 according to the IEA
What balances the scales is first and foremost the abundance of oil. According to the IEA, global supply is expected to reach a record level in 2024. It is expected to increase by 1.5 million barrels per day, to reach an unprecedented level of 103.5 mb/d. Behind this flowing faucet, there is the United States, whose production continues to defy forecasts, but also Brazil, Guyana and even Canada, according to the IEA, even if the cold spell which is raging in North America will weigh on oil operations this January.
This planned increase in production, in countries that are not members of OPEC+ (Organization of the Petroleum Producing Countries and their Allies), is expected to outstrip demand growth. And this is the second factor that offsets current supply fears. In 2024, the world will consume more oil than last year, but at a rate twice as slow – 1.2 mb/d compared to 2.3 mb/d in 2023 – which could lead to a surplus during the year, according to the IEA. Among the reasons given by the organization: the expansion of the electric vehicle fleet, or the post-Covid recovery which is coming to an end.
Stocks to respond to “anxiety”
In view of the latest forecasts, the risks are for the moment insufficient to destabilize the oil markets, but the prevailing balance nevertheless remains precarious. This is particularly true in the Red Sea where, before the start of hostilities, 10% of crude oil traffic transited.
The International Energy Agency wants to be reassuring by ensuring that there is a remedy for the anxiety of governments, industries and consumers. The organization recalls that its member states collectively hold oil stocks valued at 1.2 billion barrels, to be released in the event of an emergency.
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