There are fundamental problems facing the global economy that add pressure on oil prices and limit their rise or at least stabilise them for a reasonable period of time.
The US economy has faced over the past year and, to some extent, in the first quarter of this year, an inflation wave that has raised interest rates, but the spikes have done little to lower inflation.
These monetary policies have reinforced fears of a decline in economic growth rates among many economic institutions, observers, and senior economists. However, recent employment data confirm that the momentum in new employee numbers means that the economy has good growth potential in several vital sectors.
The extraction of shale oil and shale gas in the United States has reduced American dependence on imported oil from producing countries. The American Petroleum Institute (API) reported in May that the oil and gas sector contributes more than $2tn a year to the US economy, and created as many as 11 million jobs across industries.
If growth estimates for the US economy are in the range of 1.3% this year and 1% for 2024, the prospect of significant oil price rises may not seem realistic.
Oil and energy economists believe that the OPEC+ decision could lead to a limited reduction in oil stocks. They’re betting that Brent’s price will be around $79 a barrel in the second half of this year, and may rise to $84 next year.
If growth estimates for the US economy are in the range of 1.3% this year and 1% for 2024, the prospect of significant oil price rises does not seem realistic. The rising demand for oil in the United States is being offset by the increasing use of solar energy to generate electricity.