With the first month of the year nearly out of the way, it is a fantastic time to see just where oil prices currently are and just which direction they might take in 2024.

For the first, the answer is there haven’t been any truly earth-shattering movements with the benchmark Brent crude price staying below or just above the US$80 per barrel mark with the latest increase flagged to be due to a drawdown in US inventories.

The US Energy Inventory Administration noted in its weekly report that the US crude oil inventory dropped 9.2 million barrels (MMbbl) for the week to 19 January 2023, significantly higher than the draw of 2.5MMbbl in the previous week.

However, whatever direction oil will take for the rest of this year will depend more on geopolitics more than ever, according to independent energy research and business consultancy Rystad Energy.

It noted that about 4.2 billion people will face political change with general elections in more than 70 countries, the outcomes of which will have a significant impact on national politics and geopolitical developments.

Of particular note are the future of the US’ support for Ukraine, EU’s climate policy ambitions, tensions in the South China Sea, trade frictions between China and the West, and the ongoing conflicts in the Middle East, all of which could upset the market.

It added that oil prices are expected to stay elevated in the near term, cautioning that the US shale oil sector is unlikely to act as a buffer against OPEC’s moves to regulate the market in its favour.

Shale oil production is expected to remain flat in February for the third straight month though the EIA’s expected month-on-month declines were muted by surprising productivity gains in the Permian, Appalachia, and Haynesville.

OPEC expects demand to rise

Things are certainly not helped by OPEC’s belief that oil demand will continue to rise, increasing by 1.85MMbbl per day in 2025.

In fact, the oil cartel believes that demand will keep rising over the next two decades, contrasting with the International Energy Agency’s prediction that it will peak by 2030.

OPEC’s forecast is centred on China, India and the Middle East increasing their oil consumption again contrary to the IEA’s belief that demand growth in 2024 will halve due to below-trend economic growth in major economies, efficiency improvements and a booming electric vehicle fleet.

However, even lower demand increases will allow OPEC to have greater influence over how prices will trend this year, meaning that it is more than likely that crude oil prices will trend upwards this year.

Nuclear power growing

Nuclear energy pundits are likely to rejoice after the IEA forecast that nuclear power generation is likely to break records in 2025 as more countries invest in reactors to help shift to a low carbon economy.

New reactors in China, India, Korea and Europe are expected to come online that year while mothballed reactors in Japan are also forecast to return to generation.

This will contribute to the overall growth in low carbon power generation, which is timely given the expected increase in electricity demand around the world.

“The power sector produces more carbon dioxide emissions than any other in the world economy, so it’s encouraging to see that the rapid growth of renewables and a steady expansion of nuclear power are on course to match all the increase in global electricity demand over the next three years,” IEA executive director Fatih Birol said.

While the news is likely to be jumped on by nuclear supporters in Australia, the fact remains that even if enough political will and the funding could be gathered to proceed with a nuclear power plant, it would be many years before it could even start generating power as we will be starting from scratch.

A single plant will only also only be able to meet a small portion of Australia’s energy demand, making it even more unlikely that nuclear power might even enter into serious consideration here.