Recent developments in the oil market

Rationale Oil prices have fluctuated considerably over the past year. Against this background, it is worth analysing the factors behind recent oil price developments, as well as some key aspects for assessing the outlook for the near future. Takeaways •Following the downward trend seen in the second half of 2022, the price of oil hovered around $80 abarrel throughout 2023, albeit with notable fluctuations. •The Q3 uptick in oil prices can essentially be attributed to supply-side factors, such as the OPEC+production cuts, while lacklustre demand appears to lie behind the moderation observed during therest of the year. •Looking ahead, the potential for geopolitical tensions to push up oil prices could be offset, at leastpartially, by the release of inventories, the deployment of spare capacity and the response from otherproducers, such as the United States, although shale oil production is increasing more slowly than inthe pre-pandemic period.