The price of a barrel of Brent oil tends to fall from US$5 to US$9 over the next 12 months with the large global supply of the commodity, especially from countries that are not members of the Organization of Petroleum Exporting Countries. (OPEC), and demand problems due to economic uncertainties in China and Europe. These issues could worsen if the new Donald Trump administration in the United States adopts tariffs on imports from the Asian nation and the old continent. For international experts interviewed by Broadcast (Grupo Estado’s real-time news system) such a perspective is viable because they do not estimate that there will be an worsening of military conflicts in the Middle East, mainly between Israel and Iran.
The efforts of OPEC members to voluntarily cut oil production this year generated reductions in stocks and upward pressure on prices, which should lead to a deficit of 310,000 barrels of daily supply in 2024 compared to global demand for the commodity, estimates the HSBC bank. But this situation should reverse in 2025, with a surplus of 500 thousand barrels per day of fuel supply compared to demand, as they will reach 104.4 million and 103.9 million barrels per day, respectively “The average price of a barrel of Brent should fall from $79 in 2024 to $70 next year,” said Kim Fustier, head of European research for oil and gas at HSBC.
There is a great expansion in the supply of oil by countries that do not participate in OPEC, especially the Brazil and Guyana. On the other hand, global demand for the commodity faces several macroeconomic obstacles, especially in China, with the deep crisis in the real estate sector that reduces consumption and exerts a disinflationary force in the country. Europe’s modest growth is also another problem for rising oil consumption. “THE was the main driver of expansion in global oil demand this century, but it is in a different era as its consumption of gasoline and diesel has peaked,” commented Jim Burkhard, vice president of S&P Global Commodity Insights. “This occurred because of difficulties in expanding its gross domestic product and also due to the electrification of transport in the country, which has become an environmental and energy security issue. About 50% of new car sales in China are electric vehicles.”
Rates
The possible adoption of tariffs on imports from China and the European Union by the new Trump administration raises fears that a trade war could be triggered that could increase inflation in the United States and the euro zone. In such circumstances, the Federal Reserve (Fed) and the European Central Bank (ECB) may resume raising interest rates, which tends to slow down aggregate demand in the US, Europe and globally. This economic situation could further reduce the price of Brent next year. “High tariffs on imports from China and an average level of tariffs of 25% to 30% for other parts of the world could be implemented by the USA, which would raise the price of a barrel of oil to a mark below US$60”, he stated. Vikas Dwivedi, global energy strategist at Macquarie.
OPEC’s response to a possible firm drop in oil prices in 2025 could be to continue voluntary production cuts by member countries throughout next year. The cartel announced in June that it would increase production of the commodity by 2.2 million barrels per day over a 1-year horizon, which was postponed. OPEC faces the need to balance difficult structural conditions for the oil market, such as weaker demand than supply, and pressure from investors in member countries to produce the commodity and generate revenue, which gains greater appeal due to the energy transition. global goal for carbon neutral emissions by 2050.
There is particular focus from international experts on how the Trump administration will handle Iran’s oil exports, approaching 1.6 million barrels per day. Although there is an expectation that the future administration will adopt firm trade sanctions against the Tehran government to reduce its power over Hezbollah, Hamas and Houthis, in practice Washington’s actions may have limited impacts in curbing such fuel sales. “Just over 95% of Iran’s oil exports are directed to a single country, China, especially to independent refiners that tend to operate outside the dollar system,” said HSBC’s Kim Fustier. “The chances are very small that the US will be successful in applying pressure on these entities.”
On the other hand, there is widespread skepticism that Donald Trump will be able to increase US oil production in the short term to the point of lowering global prices, as he promised during the election campaign. “Oil companies make investments based on the underlying price of the commodity, something that any American president of any party cannot influence,” said Joel Hancock, oil analyst at Natixis. “The administration can relax environmental regulations and facilitate extraction on federal lands. Any significant impact on production will only occur in 3 or 4 years.”
*With information from Estadão Conteúdo
Published by Victor Trovão
