Why Oil Prices Never Surged to $100 This Year
Travelers, truckers and shippers worldwide can thank the U.S. for helping keep a lid on oil and gasoline prices this year. A year ago, Wall Street analysts were predicting the international benchmark for oil prices would surge from around $85 a barrel to well over $100 in 2023.
Instead, Brent crude will likely enter 2024 slightly cheaper than where it started this year, though experts warn any spread in global instability could drive it higher. Behind the surprise: actions by the Biden administration and U.S. oil companies that resulted in an unexpected surge of petroleum supplies.
After Russia invaded Ukraine, many analysts expected Moscow’s oil exports would be significantly curtailed by Western sanctions. Instead a novel price-cap scheme designed by the U.S. and adopted by its allies curbed Russia’s oil revenue while allowing its supplies to flow nearly unimpeded.
Similarly, relaxed U.S. enforcement of sanctions let Iran increase exports to countries including China and Venezuela, further weighing on prices. The U.S.
government focused on “ensuring the oil market did not experience any shortages" because of their potential to drive up gas prices and inflation, said Francisco Blanch, head of global commodities and derivatives research at Bank of America. Meanwhile, U.S. oil companies pumped more petroleum this year than ever before due largely to faster drilling speeds, longer wells and other efficiency gains.
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