{"id":9606,"date":"2025-06-05T14:47:35","date_gmt":"2025-06-05T18:47:35","guid":{"rendered":"https:\/\/www.fundamentalanalytics.com\/?p=9606"},"modified":"2025-06-05T14:47:35","modified_gmt":"2025-06-05T18:47:35","slug":"oil-outlook-surplus-supply-opec-hikes-storm-risks","status":"publish","type":"post","link":"https:\/\/www.fundamentalanalytics.com\/ar\/oil-outlook-surplus-supply-opec-hikes-storm-risks\/","title":{"rendered":"Oil Outlook: Surplus Supply, OPEC+ Hikes & Storm Risks"},"content":{"rendered":"\n\n\n
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Oil prices are entering the summer with multiple, conflicting forces at play. Brent crude averaged $68 per barrel in April 2025 \u2014\u00a0down by $5\/b from March<\/a>\u2014 but the EIA projects it to decline to an average of $66 per barrel for the year, reflecting downward pressure from rising global inventories and supply growth. The\u00a0current price<\/a>\u00a0for Brent is $64.04, while for WTI it is $60.81.\u00a0The EIA expects the\u00a0global rate of consumption growth for oil<\/a>\u00a0to fall from the 990,000 bpd rate observed from January through March to roughly 650,00 bpd for the rest of the year as macro uncertainty looms, especially after\u00a0U.S. GDP fell 0.3% in Q1<\/a>, its first contraction since 2022.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n
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Figure 1:\u00a0Prices of Brent to WTI over a ~3-year period<\/p>\n

OPEC+ remains the market\u2019s focal point as traditional geopolitical catalysts\u2014Russia-Ukraine and U.S.-Iran talks have stalled\u2014 and U.S.-EU tariff threats were postponed until July. Eight members (Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria and Oman) of OPEC+ are expected to approve a\u00a0July oil production increase<\/a>\u00a0of 411,000 barrels per day (bpd) this Saturday, continuing the group\u2019s phased reversal of prior cuts totaling several million barrels per day since 2022, aimed at supporting prices and adjusting to market demand. This follows similar hikes in May and June by the same eight-member countries and comes ahead of the full 22-member OPEC+ meeting on Wednesday, where no broader policy shift is anticipated. Beyond that, OPEC+\u00a0production targets<\/a>\u00a0for May include Saudi Arabia at 9.2 million bpd (m bpd), Russia at 9.08 m bpd, and the UAE at 3.02 m bpd, underscoring the alliance\u2019s continued influence on supply. Meanwhile, non-OPEC producers are steadily advancing. U.S. output is\u00a0forecast<\/a>\u00a0to reach 13.4 m bpd in 2025, up from 13.2 m bpd in 2024, while total new global field production could hit 2.9 mb\/d\u2014the highest in a decade<\/a>.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n
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Figure 2:\u00a0US Crude Oil Production: 2022 to 2025<\/p>\n

Goldman Sachs<\/a>\u00a0has doubled down on this bearish outlook, as supplies increase. Its analysts project non-OPEC ex-Russia ex-shale output growth of about 1 mb\/d over the next two years, driven by new projects in Saudi Arabia and Qatar. Excluding shale is notable: weak prices have already slowed U.S. fracking growth, and if low prices persist, peak shale output could arrive sooner than expected. Goldman\u2019s baseline projects Brent at $60 in 2025, falling to $56 in 2026, and WTI from $56 next year to $52 thereafter. These forecasts come despite Goldman nudging its demand growth estimate up to 0.6 mb\/d in 2025 and 0.4 mb\/d in 2026\u2014a sign the bank sees supply as the dominant factor in price direction.<\/p>\n

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Not all agree.\u00a0UBS<\/a>\u00a0points to tighter visible inventories in Q1 as evidence of a more balanced market, suggesting that both supply and demand projections may need upward revisions. The Swiss bank argues that actual stock draws contradict the \u201csubstantial surplus\u201d assumed by Goldman and others.\u00a0However, ICE futures are currently favoring a bearish outlook for the rest of the year, with drops of more than $2\/b for both WTI and Brent for the October 2025 contracts.<\/p>\n

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Figure 3:\u00a0Brent and WTI Futures<\/p>\n

Weather risks add another layer of complexity. The U.S. hurricane season begins June 1, and NOAA forecasts 13\u201319 named storms, of which 3\u20135 could become major hurricanes (category three or higher<\/a>). Last year\u2019s Hurricane Francine forced the shutdown of\u00a0roughly a fifth of oil production<\/a>\u00a0in the Gulf of Mexico for over a week, illustrating vulnerability in Gulf refining, especially in regards to impact on prices in the latter half of the year. Any severe storm could tighten regional supply and briefly lift prices, even against a backdrop of ample inventories.<\/p>\n

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Looking at the rest of the year, the EIA sees global supply at\u00a0104.13 m bpd<\/a>\u00a0in 2025 versus demand of\u00a0103.7 m bpd<\/a>. This structural oversupply underpins expectations for lower prices throughout the year, despite periodic rallies on weather or geopolitical flare-ups.<\/p>\n

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In summary, the oil market is being shaped by rising non-OPEC output, OPEC+ supply tweaks, a reduction in demand growth, and persistent economic and weather uncertainties, driving prices downward for the year. Goldman\u2019s bearish price forecasts hinge on a surge in non-OPEC non-shale supply\u2014but UBS\u2019s challenge and looming hurricane risks remind traders that even in an oversupplied market, short-term disruptions can lead to sharp, if temporary, price moves. The interplay of these factors will determine whether Brent and WTI prices remain on a downward path toward the low-$60s and potentially high-$50s or find support from unexpected tightening events.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>","protected":false},"excerpt":{"rendered":"

Oil prices are entering the summer with multiple, conflicting forces at play. Brent crude averaged $68 per barrel in April 2025 \u2014\u00a0down by $5\/b from March\u2014 but the EIA projects it to decline to an average of $66 per barrel for the year, reflecting downward pressure from rising global inventories and supply growth. The\u00a0current price\u00a0for […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"set","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[1],"tags":[],"class_list":["post-9606","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/www.fundamentalanalytics.com\/ar\/wp-json\/wp\/v2\/posts\/9606","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.fundamentalanalytics.com\/ar\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.fundamentalanalytics.com\/ar\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.fundamentalanalytics.com\/ar\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.fundamentalanalytics.com\/ar\/wp-json\/wp\/v2\/comments?post=9606"}],"version-history":[{"count":2,"href":"https:\/\/www.fundamentalanalytics.com\/ar\/wp-json\/wp\/v2\/posts\/9606\/revisions"}],"predecessor-version":[{"id":9608,"href":"https:\/\/www.fundamentalanalytics.com\/ar\/wp-json\/wp\/v2\/posts\/9606\/revisions\/9608"}],"wp:attachment":[{"href":"https:\/\/www.fundamentalanalytics.com\/ar\/wp-json\/wp\/v2\/media?parent=9606"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.fundamentalanalytics.com\/ar\/wp-json\/wp\/v2\/categories?post=9606"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.fundamentalanalytics.com\/ar\/wp-json\/wp\/v2\/tags?post=9606"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}