Brent crude climbed above $90/bbl after Israel’s attack on Iran’s Embassy in Syria on April 1, but has since eased to around $87/bbl after Iran’s drone and missile retaliation and subsequent Israeli response. Further escalation appears unlikely for the time being. At the time of writing Brent is trading at c.$88/bbl.

Rising shipping costs, wages, and high oil prices have stalled the decline in US inflation. Jerome Powell, the US Fed chief, hinted at a delay in interest rate cuts, as the US economy remains strong. There is growing speculation that the Fed may keep rates unchanged for all of 2024.

IMF revised global GDP growth to 3.2% (+0.1%) for 2024, with the US upgraded to 2.7% (+0.5%), surpassing EU growth. IMF cautioned that without addressing issues in China’s property sector, growth could stumble.
• The EIA revised up Brent forecast to average $88.55/bbl (+$1.55/bbl) for 2024 and $86.98/bbl (+$2.18/bbl) for 2025 citing geopolitical risks and strong inventory draws.

We revised oil demand growth forecast down slightly to 1.62 mb/d this year due to slower China growth. For 2025 demand growth is estimated at 1.45 mb/d.

Field maintenance season may lower global oil output by nearly 400 kb/d in May, while refinery maintenance may ease Chinese demand over May and June.

We see OPEC+ extending their voluntary cuts through 2024 and likely into 2025. However, an adjustment of quotas may take place giving some member countries higher production margins.

We forecast global production to grow by 0.95 mb/d this year and 1.53 mb/d in 2025 resulting a balanced market.