Brent to average $75 next year – OCBC

Brent Oil prices have had a volatile start to the fourth quarter. Economists at OCBC Bank analyze Oil prices outlook.

Oil prices to average $90 in 4Q23 and $88 in 2H23

Our house view remains for global Oil prices to average $90 in 4Q23 and $88 in 2H23, after a volatile start to 4Q23.

Israel-Hamas developments notwithstanding, our fundamental view is that supply tightness will persist in global Oil market in 4Q23, following the extension of additional voluntary restrictions by both Saudi Arabia and Russia to the end of the year. This will more than offset demand concerns as growth in China remains lacklustre and sticky inflation keeps global central banks, including the Fed, on a hawkish bias.

Our house view is that a build-up in recession risks in 2024 in the US will weigh on the broader global growth outlook and exert downward pressure on global Oil prices. As such, we expect Brent to average $75 next year.