Brent Rises to $85 as IEA Predicts Tighter Supply Market

By Adedapo Adesanya

Brent crude appreciated by $1.39 or 1.7 per cent on Thursday to sell at $85.42 per barrel, its highest level in four months, as the International Energy Agency (IEA) predicted a tighter market in 2024 and raised its view on oil demand growth this year.

This also helped the US West Texas Intermediate (WTI) crude to go up by $1.54, or 1.9 per cent to $81.26 per barrel, though the agency warned that the global economic slowdown acts as an additional headwind to oil use.

The IEA raised its view on 2024 oil demand growth for the fourth time since November as Houthi attacks disrupt Red Sea shipping.

The Paris-based energy watchdog forecasts demand will rise by 1.3 million barrels per day in 2024, up 110,000 barrels per day from last month, but still lower than the growth of 2.3 million barrels per day last year.

The IEA also cut its 2024 supply forecast and now expects oil supply to rise by 800,000 barrels per day to 102.9 million barrels per day this year.

The IEA’s forecasts have contradicted the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) forecasts for some time, with the international energy agency saying in May 2021 that there was no need for new oil and gas exploration any longer due to the pace of the energy transition. February 2024 oil demand forecasts from the IEA and OPEC+ diverged by over 1 million barrels per day.

Market analysts noted that prices may continue to rise as demand is staying high while supplies are getting tighter.

Support also came as Ukrainian drone strikes on Russian refining facilities continued for a second day on Wednesday, targeting four large oil refineries.

Russia’s energy ministry said Russia’s seaborne fuel exports fell 1.5 per cent from the previous month in February because of refinery downtime caused by Ukrainian drone attacks and fires.

The damage to refineries could cut Russian petroleum production by more than 10 per cent.

Also, the US Energy Information Agency (EIA) forecast on Thursday that near-term growth in global oil and liquids production will be driven primarily by the US, Guyana, Canada, and Brazil.

It said the growth from these non-OPEC producers will offset voluntary production cuts by OPEC+.