Brent currently trading at US$ 74 still remains in a range with little or no incentive to move either way.
Therefore, the ceiling at the moment is defined by US$75-US$80. This is despite the geo-political
tensions and the impact it would have had on oil prices. In the earlier updates also, it was indicated that
the demand from China is quite weak, and the highest demand was seen last in 2023 when the
demand was at 8 million barrels per day. Thereafter there was consistent decline throughout 2024. The
prominent factors influencing the demand conditions is the sub-5 % rate of economic growth, and also
the culture of electric vehicles gradually becoming fashionable. There could be some pick-up in
demand in the immediate term but the prospects for demand revival in the long run looks bleak going
by some of the estimates and forecast including those from the International Energy Agency. Added to
this is the rise in the production of non-OPEC countries like Brazil, Canada and the US which will
support more or less stable prices. While these are the fundamental factors driving oil prices there is a
counter to the current trend and indicators. This emanates from the fact that with the Trump
administration will take charge in a month’s time, and this may be the harbinger of fresh and harsher
sanctions against Russia and Iran. If the sanctions as speculated is imposed, the same may have some
visible price impact over the next two to three months but the supply situation will continue to be
abundantly comfortable.
