The rating agency said the Brent oil prices will hover around US$85-US$95 (RM406.17-RM453.96) for the remainder of 2023 and within the range of US$80-US$100 (RM382.28 – RM477.85) per barrel in 2024.
However, should there be more severe and widespread geopolitical conflicts affecting the physical supply and transportation of oil, Brent oil prices may surpass US$100 (RM477.85) per barrel, it said.
In a statement, MARC Ratings said the worldwide energy landscape is currently experiencing a complex interplay of factors that are shaping the oil market’s near-term price outlook.
“Those factors would include the ongoing conflicts in Eastern Europe and the Middle East.
“Others include supply disruptions, expectations of steady global gross domestic product (GDP) growth in 2024, and the persistence of medium-term oil dependency despite evolving environmental policies, it stated.
To illustrate, it said the Russia-Ukraine conflict that commenced in February 2022 led to a subsequent 25% surge in Brent oil prices, resulting in a sustained period of elevated prices above US$100 (RM477.85) per barrel for four months.
The agency opined the current Israel-Hamas conflict has introduced multiple geopolitical risks that could potentially have a more substantial impact on oil prices compared to the Russia-Ukraine war.
Meanwhile, it said the supply-demand dynamics in the oil market may continue to bolster oil prices.
It said the world’s largest oil importer, China, has shown signs of economic recovery, with better-than-expected growth in the third quarter of this year (Q3 2023), prompting forecasters to revise their estimates for China’s 2023 GDP growth to 5% and above.
On the supply side, MARC Ratings said production cuts would likely keep the total Organisation of the Petroleum Exporting Countries’ (OPEC) production below the pre-pandemic 2015-2019 five-year average of 36.2 million barrels per day.
This is primarily due to Saudi Arabia and Russia’s commitment to extending production quota cuts in favour of higher oil revenue over market share.
“Furthermore, the US trade sanctions against Russia and the possibility of further sanctions against Iran could further constrict both actual and expected supply, intensifying the upward pressure on oil prices,” the agency said.
It noted downside risks would include the de-escalation of geopolitical risks, weaker-than-expected growth in China and the eurozone, alongside rising production by non-OPEC members, and a temporary waiver of US sanctions on Venezuelan oil.
On top of that, an unexpected ending of voluntary production cuts by Saudi Arabia, Russia, and other OPEC+ members may also place downward pressure on oil prices.