The oil market stabilizes

The volatility that characterized oil prices due to the pandemic and the Russian invasion of Ukraine eased in 2024.

According to the most recent report released by Crédito y Caución, oil demand, which in 2023 recovered to 2019 levels, stabilized due to the slowdown in growth while supply proved to be more resilient than expected. The short-term outlook for the crude market is more resilient in the face of geopolitical risks.

The production cuts carried out by OPEC+ were offset, to a large extent, by increased production in other countries such as the United States, with production levels at historic highs. Furthermore, despite Western sanctions, Russia managed to avoid the price cap imposed by the European Union and the G7 by redirecting its exports to third countries such as India, China or Turkey.

Crédito y Caución predicts that global oil demand will reach its maximum level in the coming years and begin to decline in the second half of the 2020s. According to the projections included in this report, in a base scenario that only takes into account commitments already announced, global oil demand will reduce by 4% in 2030 and 43% in 2050, compared to current levels. In a scenario of net zero emissions for 2050, the decline would be more abrupt, 20% in 2030 and 75% in 2050.

Energy transition policies in Europe and North America, aimed at electrifying the vehicle fleet, will be the main drivers of the decline in demand. Progressively, lower production levels will be needed to meet demand and OPEC+ will increase its share of a smaller global oil market in 2050.

The future equilibrium price per barrel will be substantially lower than the current 80 dollars. According to the different scenarios included in the report, price levels in 2050 will be between 25 and 60 dollars.