#UAE’s largest lender says oil prices will average at $80 per barrel in 2024

UAE’s largest lender says oil prices will average at $80 per barrel in 2024

The UAE’s largest lender is expecting oil prices to average $80 per barrel in 2024 in a “cautiously optimistic” forecast following record crude demand from India and China in 2023 and strong recovery in global air travel.

First Abu Dhabi Bank (FAB) said in its newly launched ‘Global Investment Outlook 2024’ that geopolitical risks are expected to remain in play during the year, but certain fuel product inventories are still tight.

Saudi Arabia will increase its crude production at some point during the year, it is just a question of when, the report said, with Russian flows expected to stay close to current levels and US output close to peaking with the dollar softening.

Brent crude averaged $82 in 2023, close to FAB’s revised forecast in June of $84, the bank said, and potential headwinds and tailwinds remain in play in 2024.

The bank said the ‘war-risk’ premium which saw both Brent and WTI jump above $90 a barrel following the outbreak of the Israel-Hamas conflict in October 2023 has since dissipated.

“But the longer the fighting there continues, the risk of a broader escalation lingers, highlighted by the several attacks launched by Houthi rebels in Yemen against commercial vessels sailing in the Red Sea late last year,” the bank said.

“This ongoing threat to shipping should not be underestimated as almost 10% of the world’s seaborne oil supplies travel via this maritime route, as do significant flows of LNG.”

Other geopolitical issues including the suspension of oil production in the semi-autonomous Kurdistan region as well as Iran’s level of oil exports will be factors that could impact prices to observe in 2024, the bank said.