The latest analysis by S&P Global Commodity Insights suggests that global oil markets, driven primarily by strong production growth outside of OPEC+ led by the United States, are beginning to slow down. The Global Crude Oil Markets Short-Term Outlook predicts a decrease in non-OPEC+ crude oil production growth in the second half of 2024 and in 2025 compared to previous forecasts. The main reason for this downward revision is lower expectations for US crude production growth.
According to the report, US crude growth for the second half of 2024 is expected to be significantly lower than previously anticipated, reflecting decreased upstream activity due to decelerating demand growth and lower prices. While the United States is still projected to produce more oil in 2025 than ever before, the degree to which it will exceed previous records has reduced substantially. Despite weaker US supply growth, OPEC+ has plans to increase production later this year, potentially leading to an oversupply in the global oil market in 2025.
S&P Global Commodity Insights highlights that higher supply from OPEC+ could offset the slowing US production growth, resulting in potentially lower crude oil prices in 2025 compared to 2024. The pace of supply growth is slowing down in conjunction with decelerating global demand, indicating a potential oversupply in the crude market. However, OPEC+ retains the ability to adjust production policies to maintain unity within the group, so higher supply is not guaranteed.
The analysis emphasizes that the outlook for crude oil prices in 2025 remains uncertain due to various factors impacting the global oil market. While the US is expected to continue production growth, the pace may not be as rapid as previously projected. The prospect of additional OPEC+ barrels and the potential for oversupply in 2025 could influence price levels. Overall, the complex interplay between global supply and demand dynamics will determine the trajectory of crude oil prices in the coming years.
In conclusion, the analysis by S&P Global Commodity Insights suggests a shift in the global oil market dynamics, with the US production growth slowing down and OPEC+ maintaining its supply increase plans. The balance between supply and demand, as well as the influence of external factors such as prices and global economic conditions, will ultimately shape the outlook for crude oil prices in 2025. Despite uncertainties, the market is expected to remain oversupplied, potentially leading to lower average prices compared to 2024. Monitoring developments within OPEC+ and US production trends will be crucial for understanding the future direction of the oil market.
