Oil prices, which had averaged above $100 per barrel in 2022, were significantly lower in 2023 and averaged just above $80 a barrel—despite another war breaking out in the world.

The Hamas-Israel conflict, which began in early October, lifted oil prices, but only briefly. In less than a month, prices had given up all the gains from the new geopolitical risk in the most important oil-producing and oil cargo transit region in the world.

Brent Crude, the international benchmark, reached its highest price for 2023 at the end of September – at $98 per barrel, a week before the Hamas-Israel war began. Brent did not hit those levels again last year, despite the increased concerns about shipping in the Red Sea and the Bab el-Mandeb Strait due to intensified attacks from the Iran-aligned Houthi rebels from Yemen.

Oil prices failed to jump on the OPEC+ oil production cuts, too. Except for a brief rally at the end of September – which coincided with data about U.S. inventories falling to their lowest level since December 2022 – the market was largely expecting the cuts to continue, and the reductions were baked in the price of oil.

So, last year, Brent Crude oil prices averaged $83 per barrel, compared to an average price of $101 a barrel in 2022—a difference of $19 per barrel after rounding, according to estimates by the U.S. Energy Information Administration.

The markets have adjusted to the EU and G7 embargo on Russian oil imports faster than initially expected, and Moscow diverted its crude cargoes to destinations in Asia, mostly China and India.

“Global markets adjusted to new trade dynamics, with crude oil from Russia finding destinations outside the EU, and global crude oil demand fell short of expectations. Those dynamics offset the impacts from OPEC+ crude oil supply curbs,” the EIA said in an analysis this week.

Concerns about economic and oil demand growth and the higher-than-expected supply from non-OPEC+ producers were the two major bearish drivers of oil prices last year.

With its latest announced cuts for the first quarter of 2024, the OPEC+ alliance tries to keep tight control over the global oil supply. But the group faces record-breaking U.S. oil production and rising supply from other non-OPEC+ producers, including Brazil, Guyana, Canada, and Norway. Brazil has been invited to be part of OPEC+ starting in January 2024, but it has already said that it would not take part in any production cuts.

OPEC+ is looking to keep a floor under oil prices (at the expense of its market share), but it may not succeed in propping up prices too much. This is especially true if the group fails to extend the cuts beyond March 2024, analysts say.