Oil Market Report: Q4 2023

Q4 2023 saw numerous events affecting global oil markets.

COP28, with the UAE successfully adopting a leadership role. Achievements included:

• an agreement to gradually transition away from fossil fuels, thereby allowing countries and companies to grow their economies efficiently and to meet market demand
• greater commitments to renewable and nuclear energy growth
• 50 major O&G companies, representing 40% of global oil production, agreed to phase down methane emissions to 0.2% of their oil and gas production

Hamas-Israel war breaks out 7 October.

The war heightens supply risks for an oil market strongly influenced by rising nonOPEC oil production and weaker-than-expected economic growth in Europe and China.

Continued divergence between IEA and OPEC oil market forecasts:

• IEA: global oil consumption will peak at 102 mm b/d by 2030, declining to 97mm b/d by 2050; consumption could fall to as low as 55mm b/d by 2050 if all countries meet Paris Accord targets
• OPEC: global oil consumption will remain higher for longer, reaching a peak demand no earlier than 2045, at a level of 116mm b/d

Record-setting upstream M&A activity of USD144B was reached in Q4, including:

• ExxonMobil buying Pioneer Natural Resources for USD59.9 bn
• Chevron buying Hess for USD53 bn
• Occidental buying CrownRock for USD12 bn
• Harbour Energy buying most Wintershall Dea upstream assets for USD11.2 bn

The bottom line

• Brent oil prices entered 2023 at a level of USD79/bbl
• Q4 began with prices at USD87/bbl
• Oil prices closed the year at USD79/bbl, almost unchanged from the start of the year
• The average Brent oil price for 2023 was USD82/bbl, nearly USD20/bbl lower than the average 2022 oil price of USD100/bbl

Most forecasts for 2024 range between USD80 to 90/bbl; for 2025-2026 analysts foresee a further weakening of prices down to USD70/bbl in 2028 and beyond, in real terms, in 2024 prices.