EIA Hiked Oil Price Forecast As OPEC+ Extends Production Cut

SEATTLE (Oil Monster): The U.S. Energy Information Administration (EIA), in its March 2024 Short-Term Energy Outlook (STEO), noted that it has increased its price forecast for oil for the rest of the year, following recent decision by the OPEC+ countries to extend voluntary production cuts through Q2 2024.

The STEO foresees significantly less global crude oil production through the first half of 2024, upon comparison with world oil consumption. As per EIA, the world oil production in the second quarter of 2024 is estimated at around 101.3 million barrels per day (b/d). This is less by 0.9 million b/d from its forecast of 102.2 million b/d of world oil consumption during this period.

The recent announcement by OPEC+ countries hint at larger production cuts than earlier assumptions. Russia too has announced additional voluntary production cut in addition to the officially stated production cuts, EIA noted. This will result in a situation where market participants will have to withdraw oil from stocks in order to meet demand, which in turn will put upward pressure on oil prices. The draw on global oil stocks during the year will keep Brent crude oil prices at elevated levels.

The prices are expected to fall to $82 per barrel by end-2025, in line with the expiry of supply cuts by OPEC+.