Can the geopolitical developments set the oil prices ablaze? Pulkit Agarwal, head of India content, S&P Global Commodity Insights shares how he sees crude oil and gas prices play out in 2024
Hello viewers! Guess what? We’re now on WhatsApp Channels! Dive into real-time news updates, insights, and much more.
Follow us: https://whatsapp.com/channel/0029Va6cbsSDuMRmPCIgXS2t
Download the all-new Business Standard app:
https://bit.ly/App-BS
Join us:
http://www.facebook.com/bsindia
Tweets by bsindia
https://www.instagram.com/business.standard
Hello and welcome to the show I’m Punit wadwa and today we have with us pulkit Agarwal head of India content at S&P global commodity insights uh let me Begin by asking you your outlook for crude oil prices for uh 2024 see our outlook for uh the crude
Oil for year ahead is is the boring same levels as it is now you know between 80 to 90 that’s what we think crude oil is going to be in the next year that’s that’s down to you know slowing demand growth for next year and also you know
Because OPEC plus has to do a lot of Market management given that you know the non OPEC plus Supply is going to increase massively in the next year which is going to outstrip the demand growth as well can you guys give us some insights uh as to how the crude oil
Demand is likely to pan out uh in the year ahead see uh as regards crude oil uh in in 2023 we saw a demand growth of almost 2 million barrels or thereabouts but in in the next year we if we if we see the you know specific oil demand
Growth that’s going to be around 1 million bar per day but uh you know the the supply growth from from non OPEC plus is going to be a bit higher than that that is the main worry that you know OPEC plus has right now and that is
Uh one of the reasons why so much deliberation is taking place at OPC Plus in terms of what they want to do with supplies to manage you know the demand can you give us a number of the total Demand right now globally I think it would it is somewhere around 102 point
Something but yeah that’s that’s the sort of how do you see OPEC plus respond to the demand side uh issues yeah see in 20124 as I said uh you know OPC plus has a bit of a tricky task because uh you know the demand growth that is going to
Happen for next year is also not going to be uniform throughout the year right so what we expect is that you know in the first half of next year there’s going to be a surplus supply as compared to demand uh you know even if you know
Given the given even if you know OPEC plus decides to continue the current levels of cuts till the till the mid of next year even then there’s going to be a little bit of surplus although you know as you know the the the the seasonal demand Trends also kicks in you
Know and Q3 is typically a very strong demand quter so we would uh you know still see some stock draws and you know some deficit uh in terms of Q3 but q1 and Q Q2 are going to be quite tricky for for OPEC and that is uh you know
That is the reason why that you know uh at the time when they’re entering a lean demand sort of quarters they are they the cuts are you know at the absolute maximum so they need to do something more probably to uh to help support the crisis India enters an election year in
2024 uh and demand for autof fuels is typically High ahead of the elections so how do you see the the demand for petrol and Diesel play out in the year ahead um in the first half of 24 and post the election period we see India as a secular demand story even right right
Now India has a has a good demand uh you know I mean the wedding season and you know all the all the festivities and all those things are one thing but India right now also has a has a has a health healthy demand specifically for autof
Fuels gasoline Etc uh what we see next year is again you know continuation on on some of those you know continuation of of healthy demand for India I can’t put a number right now because I need to prer something but uh but I think the demand Trends is going to continue in a
In a secular manner for India you know pre-election and postelection of course there there might be you know a bit of cool down post elections but but we we do see you know India continuing to be a to be a leader in in global oil demand to what extent is the
Slowdown in China a worry slowdown in China is a bit of a worry uh you know uh you know China used to be a the biggest contributor to Global oil demand in the last 20 years right I mean oil industry used to look for China to be the growth
Frontier uh you know you know always right but uh but what has happened in the last three years is the the the demand growth from China is sort of you know pled right and you know 2023 was expected to be a good year for China because they were coming out of
Lockdowns Etc demand did recover in China a little bit but not to the extent you know the world was expecting right U you know given given they coming out from such a strict lockdown you know this still contributed about 70% of the 60 to 70% of the global demand growth on
The product side of things if you uh if you look at which product depends on which product you’re looking for but uh but going ahead you know again uh the the the scenario for China doesn’t look very positive because uh you know again uh I mean again next year is the base
Effect is going to be away is is going to be out of the equation as regards as you know reopening is concerned because China has been open for most parts of 20123 U so uh so it is going to be a bit of a worry and a challenge you know for
The oil markets uh you know on on the longer term side you know we should also remember that China has a very stated goal you know in terms of dialing back on the oil demand and you know uh meeting its energy demand through some of the sustainable sources so uh so I
Mean China is not sort of followed through on that policy as much but you know it is a it is a very stated policy for China and you know if if they start following through with them in 2024 25 who knows but you know when when they start following through with that I
Think that is uh uh I mean that there is going to be a bit of a uh you know demand worry uh in terms of in terms of looking looking ahead what are the three uh to five worries for the oil markets going into 2024 see due
2024 a lot of things can play out frankly uh you know of course China demand is is one factor we just talked about but other than that you know what OPEC plus is going to do because uh you know because right now OPEC plus is is
Cutting quite a lot and you know if they uh if the plan to you know dial it back so if they decide to dial that that back down I think that’s going to be one major challenge uh other things of course you know geopolitics will always
Remain a uh remain a big driver in terms of the oil markets uh what What’s happen what’s what will happen there is is of course a big worry u in terms of economy things are looking okay right now I mean I mean they there there’s certainly you
Know some uh some economic worries in certain part of the world but but you know overall you know overall economic picture looks better in 2024 to to some extent as compared to 2023 so uh so that’s economy is that is not that big a worry right uh another big worry for the
Energy Market not so much as the oil Market but the gas markets is uh you know the winters of 2023 if the winters are going to be very harsh and strong we will uh we will see some uh some you know energy deficits uh in Europe even though their inventories are quite High
High but all depends on Winters there you know you know how how Europe is going to cope up with the with with no Russian gas or you know or the kind of Russian gas they’re taking right now U you know without you know in case there
Is a harsh winter I think that’s a that’s a very uh interesting equation to look at and what extent are the markets factoring all these issues at the current levels I think markets are uh you know are quite uh quite stable right now and the reason is that you know most
Of the risk factors are already prised in in the prices can gas prices be a Joker in the pack for India even as oil prices remain stable oil gas actually impacts a lot of activities you know back home see in India there are and by
The way when we talk about gas prices in India there are it’s a multi-tiered market right there’s there’s different types of gas that goes on in India at uh at these levels of crude oil you know around $80 a barrel I think the current prices are you know you know sort of
Where uh you know you would find of course India has a policy of ceiling and floor as well right on the on the largest component of domestic gas so uh so so uh you know any increase in prices or any upward pressure in the in terms
Of the global energy Market is going to be cbed you know by the hard cap that Indian government has put on the gas prices that’s one thing uh uh you know for India you know uh you know in terms of increasing penetration of gas in the
In the domestic economy and all the all those stated things I think you know gas needs to be much more cheaper frankly to uh to go deeper into a lot of more Industries uh right now you know the global energy balances do not seem uh you know very bearish in terms of either
The gas market or the oil markets of course there’s going to be big uh Global Supply of L coming in 2025 20 late 2025 2026 when we might see you know some uh some fundamental uh decline or rather cooling off of LNG prices but till then
I think you know gas prices pretty much are going to be where they are right now that’s all for now thank you for joining us if you like this video share it and subscribe to business standard for more news views and insights log on to www.standard.com do also follow us on
YouTube Twitter Facebook Instagram Telegram and Linkedin she’s working her way to The Corner Office business standard
2 Comments
Great insight from Pulkit! Wonder by keeping Crude higher is OPEC digging it's grave?
Buy stock market oil dips.