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Business News/ Markets / Commodities/  Year 2023 | From $82 to near $100 and back: How Brent crude moved in 2023 over OPEC+ cuts and more

Year 2023 | From $82 to near $100 and back: How Brent crude moved in 2023 over OPEC+ cuts and more

By the end of September 2023, crude oil prices had risen 30 per cent in three months, with Brent staring at the $100/bbl-mark - however, the momentum could not be sustained.

FILE PHOTO: A view shows oil pump jacks outside Almetyevsk in the Republic of Tatarstan, Russia. REUTERS/Alexander Manzyuk/File Photo (REUTERS)Premium
FILE PHOTO: A view shows oil pump jacks outside Almetyevsk in the Republic of Tatarstan, Russia. REUTERS/Alexander Manzyuk/File Photo (REUTERS)

Crude oil benchmark Brent futures has moved sideways in the last one year - between January to December 2023, majorly due to the supply cuts announced by the Organisation of Petroleum Exporting Countries and its allies (OPEC+) as well as the Israel-Hamas war. Oil majors including Saudi Arabia and Russia have since then defended the oil production cuts as a precautionary measure, aimed at the ‘stability of the oil market’.

Among other reasons, a stronger US dollar and the spike in US bond yields in the last few months have also dictated the movement of crude oil prices. However, the latest meeting by OPEC+ turned out to be disappointing for the uptrend of prices as investors saw limited impact of the supply cuts on oil markets.

What's been the movement of crude oil prices in 2023?

-The Group of Seven (G7) industrialized countries in 2022 imposed a price cap of $60 per barrel on Russian oil shipments in response to Russia's invasion of Ukraine. Following this, crude prices remained volatile going into January 2023 and Brent crude hovered around $82 per barrel during the month.

Also Read: India bought Russian oil at $84.2/bbl in October, highest since December 2022: Report

-In April 2023, OPEC+ announced oil production cuts of around 1.16 million barrels per day (bpd) in a surprise decision. The shock cut, led by Saudi Arabia, immediately drove crude oil prices 8 per cent higher to $83.95 a barrel, which at the time - was the highest rise in more than a year. The voluntary cuts started from May 2023 and were put in place to last until the end of the year.

-OPEC+ met for its scheduled oil output policy decision in June 2023 and announced that it will reduce overall production targets from 2024 by a further total of 1.4 million bpd. OPEC nations produce around 30 per cent of the world's crude oil. Saudi Arabia is the largest oil producer within the cartel, producing more than 10 million bpd. OPEC+ pumps around 40 per cent of the world's crude.

-However, Saudi Arabia, OPEC cartel's dominant member, announced that it will alone make deep production cuts of 1 million bpd starting from July, as part of a broader output-limiting OPEC+ deal as the group faces flagging oil prices and a looming supply glut. The rest of the OPEC producers then had agreed to extend earlier cuts in supply through the end of 2024.

-A month later, Russia joined Saudi to announce an extra oil export curb of 300,000 bpd. In September, Saudi Arabia and Russia together announced that will extend with the oil supply curbs of more than 1.3 million bpd till the end of the year. The production cuts first announced by the oil majors in July led to a sharp surge in international crude prices - reaching almost one-year high levels.

-By the end of September 2023, crude oil prices had risen 30 per cent in three months, with Brent staring at the $100/bbl-mark, over the supply cuts by the oil producing majors. US West Texas Intermediate crude (WTI) rose 29 per cent and Brent futures surged 27 per cent between July-September.

-As oil futures inched closer to $100 a barrel, many investors took profits on the rally given ongoing macroeconomic concerns. Crude prices going above $100 per barrel mark brings inflationary pressures on global economy and will compel central banks to raise interest rates all over again.

-In October 2023, the Israel-Hamas war drove crude oil prices between 3-6 per cent, however, the momentum could not be sustained as global demand concerns outweighed the impact of supply cuts. Since then, Brent has come down to an average of $80/bbl-mark and is expected to hover between $80-$85/bbl.

-In its November 30 policy meeting, the OPEC+ recently agreed to a combined 2.2 million barrels per day (bpd) in output cuts for the first quarter of next year. The market has been concerned, however, that some members may not adhere to their commitments. Oil prices have since tickled lower as investors see limited impact of the supply cuts on markets.

-However, Brent has now started an uptrend in the last few sessions amid jitters over global trade disruption and geopolitical tensions in the Middle East following attacks on ships by Yemen's Iran-aligned Houthi forces in the Red Sea. Analysts see crude prices touching around $89-90 per barrel by the end of 2023 over Middle East tensions.

Also Read: Oil prices up $1 as Red Sea tensions lead to supply disruptions; Brent touches $80/bbl

Crude price outlook for 2024

For oil markets, an extended period of elevated crude prices hastened investment and activity outside of OPEC+, with production growth accelerating robustly, particularly in the United States, creating an unclear future for supply cuts within OPEC+.

Kurt Barrow, Head of Oil Markets, S&P Global Commodity Insights, said, “Strong non-OPEC+ supply growth and slowing oil demand growth have led OPEC+ to curtail output and support prices. While this tactic has achieved some success, maintaining discipline among member countries may be difficult in 2024 as the loss of market share continues and non-OPEC+ volumes increase. OPEC+'s ability to follow through on voluntary production cuts will be key to crude pricing over the next year."

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Nikita Prasad
Nikita covers business news and has been producing news on digital platforms since 2018. She writes on economy, policy, markets, commodities, industry. Her core areas of interests include infrastructure, energy, oil and gas, railways, and transport/mobility. She has worked for business news channels like Moneycontrol, NDTV Profit, and Financial Express in the past. If you have story ideas/pitches/reports or quotes/views to share, reach her at
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Published: 20 Dec 2023, 09:45 PM IST
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