Within the energy complex, one of the most important institutions is OPEC+, whose decisions can impact the prices of major oil benchmarks such as WTI and Brent. Consequently, signs of discord among its members create significant bearish market turbulence.
Nevertheless, it is unlikely that a consensus will not be reached by the group, as joint action by member countries tends to benefit all of them with higher prices, which is important for countries highly dependent on oil revenue.
The 2024 outlook for energy commodities, while bullisher than 2023, remains quite challenging. Despite the possibility of interest rate cuts by the end of the first semester next year, the current restrictive level may lead the American economy to lower activity. Furthermore, Europe is on the brink of a recession, and China has been importing more oil than actually necessary.
Moreover, the exchange of hostages between Hamas and Israel, a significant humanitarian step, has brought a sense of relief to tensions in the region surrounded by oil-producing countries. This reduces the risks of disruptions in the oil supply through the Strait of Hormuz or from Iran.
From the perspective of oil-producing and exporting countries, providing support to prices will be crucial, as there are few fundamentals on the demand side to sustain higher increases in the short run. Therefore, measures need to be taken from the supply side, which is to say, in other words, cuts from OPEC+.
