The Economist Intelligence Unit has predicted that the price of oil on the international market, will stay above the $80-per-barrel mark until late 2025, heightening inflationary pressures in many countries grappling with currency devaluation against the dollar.

The global oil market slipped into deficit in the first quarter of 2024, as demand surpassed production. 

This, coupled with increasing geopolitical tensions, led to a revision of oil price forecasts. 

The EIU anticipates Brent Blend to maintain its price above $80 per barrel until late 2025, exacerbating inflation concerns amidst currency devaluations.

Additionally, the EIU foresees oil prices hovering around $90 per barrel in the coming months, bolstered by market deficits and escalating tensions in the Middle East, with the Israel-Hamas conflict potentially escalating into a wider regional crisis.

“Even if disruption to oil shipments from the region remains minimal and traders shrug off concerns about military escalation, prices are set to remain high as the global market remains in deficit until late in the year [2024]. We expect that OPEC+ will strictly observe reduced output quotas and that Saudi Arabia will continue to adhere to additional, sharp voluntary cuts until at least mid-2024 and only slowly lift production towards the end of 2024 at the earliest”, it noted.

The EIU added: “We continue to expect US production to increase moderately in 2024 before stabilising in 2025, but the recent rise in prices is not enough to elicit a stronger supply response”. 

It noted: “The US oil rig count, at 508, is actually down by 14% from a year ago, according to Baker Hughes, an oilfield services firm, as US oil companies continue to prioritise dividends for shareholders”.