OPEC’s late November decision to slash output by 2.2 million barrels per day, up from the current 1.3MMbpd, for the first quarter of 2024 has not prevented the benchmark Brent crude price from falling below the US$80 per barrel level.

In fact, the benchmark is currently priced at US$74.91/bbl, bouncing up only slightly after the US Energy Information Administration reported that its crude oil inventories experienced an estimated inventory draw of 4.3 million barrels (MMbbl).

While there’s no doubt that the oil cartel still has tremendous influence on the sector, it has failed to find traction against several factors, including concerns about global oil demand growth, evidence of robust supply, and expected growth in US output.

Not that OPEC is – outwardly at least – perturbed.

In its Monthly Oil Market Report, it blamed “exaggerated concerns about oil demand growth” for the recent oil price slump and maintained its oil demand growth forecasts for this year and next.

OPEC expects world oil demand to average 102.1MMbpd this year before increasing to 104.4MMbpd in 2024 based on improvements in economic activity, steady manufacturing, and transportation activity in non-OECD countries.

So which way is oil likely to go?

With just two (or so) weeks to go before the end of the year, it is unlikely that prices will make major moves in either direction.

In 2024, it’s a better than even bet that prices will climb at some point and an almost 100% certainty that we will see the usual US$100/bbl forecasts (or higher) that may or may not come to pass.

Doubling down on nuclear

Politicians jumping on the nuclear bandwagon is like watching a zombie movie – just when you think it’s dead, it pops right back up again.

The federal opposition has once again voiced its support for nuclear, this time turning its attention to advanced, large-scale Generation III+ reactors rather than unproven small modular reactors.

Opposition climate change and energy spokesperson Ted O’Brien added that a Coalition government would back a nuclear pledge that just 22 countries had signed up to during the COP28 climate summit.

This is in sharp contrast to the government’s commitment at the same summit to triple renewable energy.

Both promises are short on details, which isn’t surprising really but we really have to question just how realistic building a nuclear reactor in Australia would be.

Not only are nuclear reactors – especially large-scale plants – multi-year projects, Australia has no experience in building them in the first place.

That’s without considering the inevitable blowouts that large-scale infrastructure projects tend to run into in Australia.

Even if we were to start planning to build nuclear reactors now, it will take a significant amount of time to even get approvals squared away.

Realistically, it will take at least a decade before said plant starts producing electricity and that’s just one plant that costs tens of billions of dollars while capable of producing an average of just 1 gigawatt of power, a fraction of the 65.25GW of generation capacity in Australia as of December 2021.

To even have the ghost of a chance to meet a significant portion of our energy demands, Australia will need three, maybe four reactors… hardly realistic given the cost and time frames.

Maybe try something else hey?