Crude Oil Market Overview
In Q4/2024, ICE Brent crude oil prices averaged $74.40 per barrel (October 1 to November 29), down from $78.51 per barrel in Q3. This decline is attributed to weakened demand, largely driven by China’s sluggish economic performance. China’s Q3/2024 GDP growth reached +4.6% year-on-year, the lowest since Q1/2023, due to subdued domestic consumption, a prolonged real estate downturn, and slower government spending.
To address these challenges, China has introduced several stimuli packages, including:
- Cutting the 7-day Reverse Repo rate by 0.2% to 1.5%.
- Reducing the minimum down payment requirements for second homes from 25% to 15%.
- Increasing the local government debt ceiling to 35.52 trillion yuan ($4.95 trillion) to refinance existing debt.
However, UBS Group AG has criticised these measures as indirect stimuli, emphasising the need for more robust economic policies.
Source:ABC News (https://www.abc.net.au/news/2024-11-06/us-election-results-map-donald-trump-victory-path/104558036)
US-China Relations and Economic Impacts
Currently, under the administration of President Joe Biden, the US has tariffs on Chinese products, such as 25% on steel, aluminium, and lithium-ion batteries, as well as 102.5% on electric vehicles. However, President-elect Donald Trump, elected to be the 45th and 47th president of the US with 295 electoral votes on 5 Nov.’24, proposed new trade policies that increase the 10% tariff on all imported products from China. This policy could put pressure on China’s export-driven economy.
Oil Production and Market Dynamics
President-elect Trump pledged during the election campaign to boost domestic oil and natural gas output, including nuclear energy projects, which could lower energy costs in the US. Currently the US produces 13.5 million barrels per day (MMBD) of crude oil and exports 3–5 MMBD. However, the International Energy Agency (IEA) expected a slower growth in global oil demand. IEA forecast global oil demand in 2024 increase by 920 kilo barrels per day (KBD) year-on-year (YoY) to 102.82 MMBD (revised down by 20 KBD). While, in 2025 increase by 990 KBD YoY to 103.81 MMBD (revised down by 30,000 barrels per day). Oil demand growth has been weaker than expected due to economics challenges and a shift toward New Energy Vehicles (NEVs) in China.
Source:Bulgarain Military (https://bulgarianmilitary.com/2024/12/01/revealed-a-space-tech-behind-russias-deadly-oreshnik-missile/)
Geopolitical Tensions
Geopolitical tension in the Middle East remains volatile despite a ceasefire between Israel and Hezbollah in Lebanon, which began on November 27, 2024, for 60 days. Violations have already occurred, including Israeli airstrikes on Hezbollah missile bases on November 30.
The conflict between Russia and Ukraine has intensified as Ukraine utilizes US-approved ATACMS missiles and European-supplied weapons, such as Storm Shadow and SCALP-EG. Russia responded with Oreshnik, a new intermediate-range ballistic missile that has a range of 3,000–5,500 kilometers, targeting Dnipro, a city in Ukraine. President Putin has warned Western nations such as the US and NATO that if Ukraine uses its missile to strike Russia, it could lead to a global conflict.
Outlook and Forecast
Analysts from PTT Public Company Limited predict that ICE Brent crude oil prices in Q4/2024 will range between $70–80 per barrel. Key factors shaping this outlook include weak global and Chinese crude oil demand amid economic challenges, a shift towards clean energy, persistent geopolitical risks in the Middle East, the intensifying Russia-Ukraine war, and the ongoing adoption of clean energy, all of which are likely to sustain short-term volatility in crude oil prices.