The weak demand for oil in China has caused Commerzbank’s commodity analyst, Carsten Fritsch, to lower the oil price forecast for the end of the year by $5. Fritsch now predicts a Brent oil price of $85 and a WTI price of $80 per barrel, taking into account geopolitical tensions in the Middle East. The gradual withdrawal of voluntary production cuts by OPEC+ planned from October is expected to be suspended until the end of the year to avoid oversupply and a fall in prices due to subdued demand in the fourth quarter.
OPEC+ has already partially increased production earlier than planned, with production levels in July exceeding the agreed levels by 920 thousand barrels per day. The production volume in July was also 250 thousand barrels per day higher than in June, with countries like Iraq, Russia, and Kazakhstan producing more than agreed. Iraq and Kazakhstan have already surpassed production levels that were meant to be reached in September 2025, while Russia’s current production levels are on track to reach targets set for March/April 2025.
The increase in production levels by OPEC+ members has contributed to the downward pressure on oil prices, leading to a reduction in the end-of-year forecast. The decision to suspend the gradual withdrawal of production cuts until the end of the year is aimed at preventing oversupply and further price declines. The geopolitical tensions in the Middle East add a certain risk premium to the forecasted oil prices, with Brent expected to reach $85 and WTI at $80 per barrel.
Fritsch’s revised forecast takes into consideration the potential impact of geopolitical tensions and the increased production by OPEC+ members on oil prices. The decision to suspend the planned increase in production levels until the end of the year is a strategic move to avoid oversupply and maintain stable prices in the market. Despite the challenges posed by weak demand in China and the ongoing geopolitical tensions, Fritsch remains cautiously optimistic about the outlook for oil prices towards the end of the year.
In conclusion, the downward revision of the oil price forecast for the end of the year reflects the impact of weak demand in China, increased production levels by OPEC+ members, and geopolitical tensions in the Middle East. Fritsch’s prediction of Brent at $85 and WTI at $80 per barrel takes into account these factors and aims to provide a realistic assessment of the market conditions. The decision to suspend the gradual withdrawal of production cuts by OPEC+ until the end of the year is a proactive measure to prevent oversupply and maintain stable prices in the face of uncertain market dynamics.
