Oil prices could climb; 2024 US production growth outlook halved by RBC Capital

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The world's oil supply is about to get way tighter and send crude prices climbing, according to commodities expert Helima Croft.

The global head of commodity strategy at RBC Capital Markets pointed to signs that supply-demand imbalance in oil markets could soon tip in the other direction, as the world's crude production is poised to slow. That could cause Brent crude, the international benchmark, to hit $85 in the second half of 2024, Croft predicted.

The US, which saw a "blockbuster" year for oil production in 2023, isn't likely to churn out crude at the same speed it did last year. US production growth could crater in half from 1 million to just 500,000 barrels a day this year, Croft predicted, citing her conversations with other oil market watchers at the recent International Energy Week conference.

"It's not that we're saying … US production is not going to grow," Croft said in an interview with CNBC on Monday. "It's just a question about, were the gains that we saw last year due to particular unique circumstances that are not going to be replicated this year."

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The same also applies to major oil producers like Guyana, who may not be able to replicate their monster oil boom in 2023.

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OPEC+ is also looking to continue its aggressive production cuts. Members of the oil cartel said they would extend the group's 2.2 million barrel-a-day production cut through June. Saudi Arabia, the oil cartel's de facto leader, will continue its voluntary production cut of a million barrels a day, while Russia will cut production an extra 471,000 barrels a day.

Announcement of those cuts has already caused oil prices to tick higer. Brent crude traded around $82 a barrel on Monday, up around 8% from its levels at the start of the year.

"I do think sentiment is starting to turn, but again, we're not seeing yet the runaway path to a hundred [dollars a barrel]," Croft added.

At the same time, the world's oil demand is rising, and could peak around 1.2 million barrels a day in 2028, the IEA estimated. That could mean the oil market will see a shortage as soon as 2025, Occidental's CEO Vicki Hollub recently warned.

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