No Calm Before This Oil Storm

Between the supply-side shocks and unrelenting demand destruction delusions, it seems like the case for higher oil prices in 2024 cannot get much stronger. 

We took a close look at those factors last week.

Even the Energy Information Administration can’t ignore this bullish sentiment with so many converging factors coming into play today. 

According to the EIA’s latest Short-Term Energy Outlook, Brent crude is expected to average $94.91 per barrel in 2024:

This isn’t a shocking prediction, nor should it surprise any of you. 

On March 17, 2023, WTI crude was trading around $66.74 per barrel. That was the day I told you there was a fire sale taking place in oil. Oil had dropped like a stone in the weeks leading up to that date, and by all accounts it looked grossly oversold. 

We were told by major media outlets all year that China’s economy was on the brink of collapsing into a recession, that oil was going to head even lower and the sector was going to get wiped out. 

They were wrong.

March 17 turned out to be the lowest point for oil prices in 2023. 

Over the next six months, WTI crude prices climbed more than 40%.

Mark my words: There will be no calm before the next oil storm.

If you’ve been a part of our investment community here at Energy and Capital for a while, then you know I’m not one for hyperbolic price predictions. 

Typically, exorbitant price forecasts we see headlining the mainstream media are nothing more than ridiculous attention-grabbers — when the Russo-Ukrainian war was still heating up in 2022, there was no shortage of them.

And yet it’s been difficult lately for anyone not to pause and wonder if the recent conflict in the Middle East warrants further consideration. 

Perhaps. 

Even though we haven’t seen the kind of exaggerated calls like JPMorgan’s jaw-dropping $380 oil prediction from 2022, the heightened level of geopolitical risk right now has undoubtedly put a premium on crude prices. 

Just this week, The World Bank’s October 2023 Commodity Markets Outlook gives us a look into their forecast scenarios. 

In the “small disruption” scenario, which was roughly what we saw during the Libyan civil war in 2011, global supply would be disrupted by as much as 2 million barrels per day — enough for oil prices to climb to a trading range between $93 and $102 a barrel. 

Under its “medium disruption” scenario, roughly equivalent to the Iraq war in 2003, oil supply would be reduced by between 3 million and 5 million barrels per day and prices would jump to around $120 per barrel. 

However, the “large disruption” scenario — something akin to the Arab oil embargo in 1973 — as much as 8 million barrels per day would be taken out of the supply side of the equation and crude prices would surge to nearly $160 barrels per day. 

So the real question now is whether or not this conflict will escalate further. 

But hey, with Israeli tanks rolling into Gaza as you read this, the threat of a multi-front war opening on Israel's northern border, Iran’s fiery rhetoric echoing in the background, and two U.S. carrier groups mulling about off the coast… What could possibly go wrong?

Do you think it’s a coincidence that two of the largest publicly traded energy companies on the planet decided to spend a combined $113 billion on assets that are a little closer to home?

Don’t worry, I don’t either. 

But oil is a much different game than it was even 10 years ago.

And it’s time you make sure you’re in the perfect position to take advantage of this situation. 

Later this week, I’ll show you precisely where to be.

Until next time,

Keith Kohl

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A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.

For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.

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