Brent crude remained unchanged across December at $79/bbl, however fluctuated throughout the month due to concerns of a worsening macroeconomic outlook impacting global demand and a mixed supply outlook. Brent Crude fell to the lowest price since July at $73/bbl by mid-month, following scepticism over the effectiveness of OPEC+ output cuts in 2024, despite Russia and Saudi Arabia encouraging all other producers in the group to join the production cuts to support prices. Key economic data highlighted low demand in the US and China, alongside ample production with the US announcing a solicitation for up to 3 million barrels of oil delivery to the Strategic Petroleum Reserve in March 2024, causing a seven-week decline in Brent crude for the first time in five years. However, OPEC maintained its oil demand growth forecast for this year and next, blaming the recent price drop on “exaggerated concerns” about oil demand growth. Towards the end of December, Brent crude recovered towards $80/bbl, as Houthi attacks on commercial vessels in the Red Sea prompted major container lines to pause voyages, including oil giant BP.

GBP started December at $1.264 against USD, strengthening to near its highest rate since August at $1.275 by mid-month, ending the month at $1.274. Key economic data revealed that the UK is facing slow growth and high inequality, leaving Britain in relative decline. A thinktank’s health check of UK prospects also concluded that the British government has lacked a coherent economic strategy for several years, leaving the nation lagging behind other G7 economies. However, official figures showed that consumer price index inflation fell to a two-year low of 3.9% in November, which is likely to bolster speculation that the Bank of England may consider interest rate cuts earlier than expected, after maintaining rates at 5% in the final meeting of the year. The US Federal Reserve also held rates steady, but indicated an aggressive interest rate cut plan for 2024 with at least three reductions, causing the US dollar to weaken. However, the currency regained momentum after the central bank suggested that the market overreacted to its plan, causing GBP to depreciate by month-end.

The COP28 UN climate summit took place in Dubai during December, leading to several energy news headlines with the industry paying close attention to the stance on fossil fuels. Prior to the beginning of the summit, the United Arab Emirates reportedly planned to use its role as the host of COP28 as an opportunity to negotiate oil and gas deals. Meanwhile, Rishi Sunak claimed that the UK is a “world leader on climate” with a “better track record than any other major economy in decarbonising”, despite attending COP28 for just half a day. The key headline was that governments agreed for the first time ever to “transition away” from fossil fuels in the UN’s draft text of the deal, however did not directly refer to phasing them out. The geopolitical landscape remained turbulent in December, as attacks on commercial ships in the international waters of the Red Sea intensified, with Iranian-backed Houthi militants claiming responsibility. The attacks prompted oil major BP and shipping giants MSC, Hapag-Lloyd, CMA CGM and Maersk, amongst others, to pause shipments through the Red Sea and Suez Canal, and the US announced a new maritime task force to protect commercial vessels. Finally, after the temporary ceasefire ended between Israel and Hamas on the 1st of December, the UN general assembly demanded an immediate humanitarian ceasefire in Gaza, to no avail thus far.