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Oil may hover near $87 per barrel in 2024 on OPEC cuts: Analyst

OPEC+ member nations have agreed to voluntarily cut their oil production output by up to 2 million barrels per day in 2024, according to a report from Reuters. Crude oil prices (CL=F, BZ=F) fluctuated today on the news.

Enverus Senior Associate Josie Mills comments on which direction this decision and geopolitical conflicts could push oil prices over the next year.

Oil prices could be "probably a little softer in the first half of the year there, and then picking up into the back end to high $80s as demand picks up seasonally into 2024," Mills tells Yahoo Finance.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

DIANE KING HALL: Josie, one of the things that had affected oil prices recently, obviously, we saw turbulence when the war between Hamas and Israel started. And we've seen prices kind of cool since then. What are we watching for in terms of any geopolitical issues that could trigger an impact to oil prices?

JOSIE MILLS: Definitely. Well, it's kind of what keeps oil interesting is there's always so much volatility depending on what's happening across the world. I think we're into the winter, yeah, you're watching for more stability. As you guys highlighted, going forward you're watching to see these cuts come in successfully from OPEC.

Likewise, I think, on the other hand, you're watching what other countries are doing. I mean, we've seen Brazil really increase production this year. You saw Iran increase production quite a bit based on the lowering of or alleviating of sanctions from the US. So I think just following those different agreements and following how the US government is working to keep energy prices low, whether that's meetings with Venezuela or meetings with Iran to try and build those relationships to alleviate sanctions there to increase production, is really something to keep an eye on.

JOSH LIPTON: And Josie, so bottom line for you, you know, I'm looking at Brent here, 82.85. Where do you see that price headed, let's call it, in the near to intermediate term?

JOSIE MILLS: Yeah. With these price cuts that have been or these OPEC cuts that have been implemented, we expect prices to average around $87 throughout 2024. So probably a little softer in the first half of the year there and then picking up into the back end-- back end to high 80s as demand picks up seasonally into 2024.

DIANE KING HALL: Josie, what are we expecting then based on the result of today's meeting for the impact to gas prices?

JOSIE MILLS: Yeah. So you know, we've been watching prices or gasoline prices soften over the past few weeks here as stocks have really began building. Looking at September to October, they've built about 9 million barrels per day. So quite sizable amount. But also, seasonal as you see that demand fall off following the driving-- the summer driving season.

So we definitely expect you'll start to feel more of the pressure at the pump as these cuts kind of roll on in the first quarter of 2024 Yeah. We expect the prices to be about $85 per barrel in that first quarter. So as that comes down to the price, you expect a bit of an increase there.