Oil Prices Set to Conclude 2023 10% Lower Amid Geopolitical Fluctuations and Production Cuts: Report

Oil prices are poised to finish 2023 approximately 10% lower, marking a downturn after two consecutive years of gains. The year witnessed significant fluctuations in oil prices due to geopolitical concerns, production cuts, and central bank measures aimed at curbing inflation.

On December 29, oil prices experienced a rebound following a 3% decline the previous day. This uptick was attributed to increased preparations by shipping firms to navigate the Red Sea route. Several major companies had temporarily halted the use of Red Sea routes due to security concerns arising from the targeting of vessels by Yemen’s Houthi militant group.

As of the last trading day of 2023, Brent crude futures saw an increase of 72 cents, or 0.9%, reaching $77.87 per barrel at 1420 GMT. Simultaneously, US West Texas Intermediate (WTI) crude futures rose by 76 cents, or 1.1%, reaching $72.53.

Despite these recent fluctuations, both benchmarks are on track to conclude the year at their lowest levels since 2020 when the global pandemic severely impacted demand, causing oil prices to plummet.

Efforts to stabilize prices through production cuts by the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, have proven insufficient. The benchmarks currently reflect a nearly 20% decrease from the peak levels witnessed earlier in the year.