Today in Energy: A look back at our forecast for global crude oil prices in 2024

Data source: U.S. Energy Information Administration, Short-Term Energy Outlook (STEO), January 2024 and January 2025

Benchmark Brent crude oil prices averaged $81 per barrel (b) in 2024, in line with the $82/b for the year that we had forecast in our January 2024 Short-Term Energy Outlook (STEO) and more in-depth analysis. In the January 2024 STEO, we forecast that markets would be relatively balanced in 2024, changing little from the 2023 average Brent price of $82/b. On an annual basis, our forecast for balanced markets was relatively accurate, as global inventories showed only a slight drawdown of 0.18 million barrels per day in 2024.

Monthly crude oil prices in 2024 remained between $70/b and $90/b. Sluggish demand and relatively high supply outside of the OPEC+ countries contributed to the relatively narrow trading range for crude oil despite geopolitical tensions in the Middle East and shipping disruptions in the Red Sea. Several extensions of OPEC+ production cuts also helped keep prices from falling below this range.

OPEC+ production cuts helped raise the price of Brent crude oil in the first four months of 2024. In April 2024, Brent crude oil prices trended higher than we had forecast in our January 2024 outlook, and the spot price of Brent crude oil rose from a monthly average of $78/b in December 2023 to $89/b in April 2024. The spot price of Brent reached a 2024 peak of $93/b on April 12, 2024, amid concerns that the tensions between Iran and Israel could escalate into a wider conflict and disrupt global oil supplies.

OPEC+ announced delays to production increases multiple times in 2024. However, production growth from non-OPEC+ members continued to increase, offsetting OPEC+ production cuts. U.S. production of crude oil reached a monthly record in October 2024 of 13.5 million b/d, and production in Guyana and Canada also increased on an annual basis in 2024.

Weakening global economic growth contributed to downward pressure on the price of Brent. Slowing economic activity and reduced fuel demand in China limited upward price momentum. In addition to slowing economic growth, longer-term trends in the transportation sector in China also reduced consumption of liquid fuels compared with our January 2024 forecast. Substitution toward liquefied natural gas for trucking goods and expanding electric vehicle ownership in China limited consumption growth for transportation fuels, a trend we had identified last January as a source of weakening demand for liquid fuels in China.

As a result of the offsetting production and weakening demand, the price of Brent continued to trend down in the second half of 2024, averaging $75/b during the fourth quarter, $6/b below our January 2024 forecast of $81/b.

Data source: U.S. Energy Information Administration, Short-Term Energy Outlook (STEO), January 2024 and January 2025

Although the disruptions to shipping in the Red Sea continued through 2024, oil exporters were able to find alternative routes, and supplies were mostly unaffected. The conflict between Iran and Israel has not, of yet, created supply disruptions. In early October 2024, in anticipation of a retaliatory strike from Israel in response to an attack by Iran, Brent crude oil prices rose to $82/b on October 7 but resumed their decline when Israel’s strike did not target Iran’s oil infrastructure.