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Commodity markets, like other financial markets, have been unusually volatile in the last month, largely due to the trade policy announcements by the new United States administration.

The average price for 2024 has been very close to $80 per barrel of Brent, although with a downward trend throughout the year, largely due to more subdued economic activity in China and the gradual increase in supply from the main producers in the Americas.

Commodity prices are front and center in global economic discussions. The last two months have seen the cost of oil rise by around 10%, alongside significant volatility. This has a lot to do with the short-term chaos.

The oil market remains at the center of the global spotlight. This has been the case for some months now due to the outbreak of the war between Israel and Hamas, a confrontation reminiscent of the most difficult moments of the oil market in the 1970s.

We will see a very tight market throughout 2023, despite what is likely to be a significant economic slowdown due to various shocks, following the trend seen in recent years.

With inflation on the rise globally and an increase in Brent prices of around 50% year to date, there are many voices in favour of increasing the supply of oil. OPEC+ has a solution, but after the lack of consensus during the recent meetings, discussions have been put off with no date set for the next.

Economic recovery, output cuts, and progress on Covid-19 vaccination have boosted oil prices. OECD inventories are receding from above-average levels, implying a tighter market.

Faltering demand is preventing oil prices to experience a sustained increase. Fundamentals are consistent with our baseline scenario. In the absence of a vaccine, we expect prices to remain below $45 per barrel for the rest of the year.