EIA forecasts crude oil price increase in 2024

We forecast higher oil prices in the second half of 2023 and into 2024 on the back of moderate but persistent inventory drawdowns in our most recent Short-Term Energy Outlook (STEO). We expect production cuts from OPEC members and forecast higher petroleum consumption to lead to an average inventory drawdown of 0.4 million barrels per day (b/d) from July 2023 through the end of 2024. Our forecast supports the Brent crude oil price rising to the mid-$80 per barrel (b) range by the end of 2024, up from the June 2023 average of $75/b (Figure 1). We forecast the West Texas Intermediate crude oil price will follow a similar path and maintain a $5/b discount to Brent.

On June 4, OPEC+ members agreed to extend crude oil production cuts through the end of 2024. The cuts had previously been set to expire at the end of 2023. Following the June 4 meeting, Saudi Arabia also announced a new voluntary oil production cut of 1.0 million b/d for July and August 2023. We estimate that Saudi Arabia produced 10.1 million b/d in June 2023, or about 10% of world petroleum and other liquid fuels production. We forecast OPEC petroleum and other liquid fuels production will average 33.9 million b/d in 2024, down 1.2 million b/d from the group’s 2022 peak of 35.1 million b/d in September of that year (Figure 2). These production cuts will keep total OPEC production below pre-pandemic five-year (2015–19) average levels of 36.2 million b/d and reduce OPEC’s share of world consumption to 33% in 2024, down from the pre-pandemic average share of 37%.

We have slightly increased our forecasts for world petroleum consumption in recent months, in contrast to our downward revisions in world petroleum production. In our latest forecast, we expect non-OECD petroleum and liquid fuels consumption will grow by 1.6 million b/d from 2022 to average 55.1 million b/d in 2023, followed by 1.4 million b/d of growth in 2024 to average 56.5 million b/d. China and India lead the consumption growth. We forecast China’s consumption to grow by 0.8 million b/d in 2023 and by 0.4 million b/d in 2024, and we forecast India’s consumption to grow by 0.3 million b/d in both 2023 and 2024.

We can partially identify global supply and demand trends through analyzing changes in petroleum inventories. Because we do not have frequently updated statistics on non-OECD country petroleum inventories, we analyze commercial petroleum inventories held in OECD countries. We estimate that OECD petroleum inventories totaled 2.8 billion barrels as of June 2023. Although this level is 7% higher than in June 2022, it is 3% less than the pre-pandemic five-year average. Because consumption in OECD countries has not returned to pre-pandemic levels—and we forecast that it will not by 2024—commercial petroleum inventories are at pre-pandemic average levels when adjusting for consumption, a metric known as days of supply (Figure 3). In this context, petroleum inventories are within the normal range, which suggests that markets have mostly returned to inventory levels adequate to meet demand. Nonetheless, we expect OECD petroleum days of supply to move to the low-end of the range by late 2024.

Oil prices in 2023 have been considerably less volatile than from 2020 to 2022. Nonetheless, our forecasts are inherently uncertain, and any change in world production and consumption from our forecasts could result in significant differences in oil prices than our forecast for 2024.

For questions about This Week in Petroleum, contact the Petroleum and Liquid Fuels Markets Team at 202-586-5840.