Oil markets and clean energy investments

Key takeaways:

– Most forecasting agencies are aligned that Asia Pacific, and in particular China, are the main drivers for oil demand growth in 2024. That has come despite the discrepancy in oil demand forecasts between the bullish OPEC and the IEA which has been the most bearish on oil demand growth this year.

– While we recently saw positive data on the Chinese economy, they do not provide a strong basis for a notable upward pressure on oil prices. China is still suffering from structural problems that could hinder a strong rebound in its economy and therefore oil demand.

– The geopolitical tensions since the war in Ukraine have been factored in oil markets analysis. As long as there is an absence of supply disruptions, the impact of those developments on prices will be limited. At the same time, the upcoming elections in the US would entail that the current administration to favour a lower oil price environment as this would reflect on the mood of the average US elector.

– The current market fundamentals do not support a major revision in OPEC+’s policy – they have not changed significantly since the producers’ group announced the current strategy.

– While the Gulf region is known for its cheap oil, it has been able to leverage its hydrocarbon revenues to invest in low carbon projects such as hydrogen and CCUS.