Navigating Crossroads: Global Oil, Mobility Sectors At Critical Juncture In 2024

In 2024, the global oil and mobility sectors find themselves at a pivotal crossroads, navigating through a labyrinth of intricate geopolitical, technological and economic dynamics.

According to S&P Global Commodity Insights, this juncture presents a moment of profound significance, as these industries confront a myriad of challenges and opportunities that are poised to redefine their very landscape.

From geopolitical tensions to rapid technological advancements and shifting economic paradigms, the year ahead holds the promise of transformative change, setting the stage for a new era in the realms of oil and mobility.

The OPEC+ alliance stands at a crossroads, confronted with the challenge of navigating between curtailing oil supply to boost prices and defending market share amidst escalating conflicts and burgeoning output from the Americas.

With spare production capacity nearing 5 million b/day, particularly concentrated in Saudi Arabia and the UAE, the alliance's strategic direction for 2024 remains uncertain, accentuated by Angola's departure from the group.

The US and Canada emerge as dominant players in global oil and gas production, driven by advancements in the Permian Basin, Canadian Oil Sands, and US shale gas.

Despite challenges, a substantial increase in production is anticipated in 2024, contingent upon the stability of oil prices.

This surge underscores North America's pivotal role in meeting global liquid fuel demand.

China's oil demand is projected to witness a notable slowdown in growth, attributed to various factors, including a tepid post-pandemic recovery, a cooling real estate market, and a shift towards a service-oriented economy.

The anticipated moderation in demand underscores shifting dynamics in China's energy consumption landscape.

The momentum of electric vehicle (EV) adoption in China has surged remarkably, driven by policy incentives and infrastructure development.

In contrast, Europe and the US experience more gradual increases in EV market share, albeit with signs of potential acceleration.

These developments signal an evolving global landscape where EV adoption could gain further traction.

China's strategic use of lithium iron phosphate batteries and its dominance in the global battery supply chain position it favourably to influence BEV affordability worldwide.

The growing emphasis on EVs over internal combustion engine vehicles promises downward pressure on BEV prices, albeit tempered by potential shortages in battery raw materials.

Global oil demand is projected to moderate in 2024, influenced by trends in global GDP growth and oil prices.

Key demand drivers include jet fuel, diesel, and gasoline, with uncertainties such as oil price volatility and geopolitical events posing potential deviations from anticipated growth trajectories.

Latin American oil production is poised to reach new heights, propelled by significant offshore developments in Brazil and Guyana.

Their strategic positions as key suppliers to major markets underscore their pivotal role in maintaining global oil supply stability.

The US and Eurozone are key to global GDP trends, while Asia, particularly China, India and Southeast Asia, remains a critical support, contributing 60 per cent to the rise in oil demand.

Oil production from sanctioned suppliers is expected to remain stable in 2024, with geopolitical tensions complicating further supply expansions.

Shifts in trade dynamics towards the Asia-Pacific region reflect the complex interplay of global oil politics and market demands.

The redirection of sanctioned oil towards Asia-Pacific markets is notable, with Russian exports to Asia jumping from 36 per cent to 83 per cent post-sanctions.

However, both Iranian and Venezuelan exports have reduced, with China and India emerging as primary buyers.

Forecasts about upstream investment are clouded by uncertainties surrounding the pace and scale of the energy transition.

Government policies and industry pledges will critically influence upstream investment, with accelerated efforts expected in methane reduction and carbon capture technologies.

The upcoming US elections in November carry profound implications for international relations, trade policies, and environmental commitments.

The outcome could reshape the strategic calculus of oil markets and mobility sectors worldwide, underlining the significance of political developments in shaping global energy landscapes.

As the global oil industry navigates through these multifaceted challenges and opportunities, strategic foresight, adaptability, and collaborative efforts will be paramount in steering towards a sustainable and resilient future. (ANI)