OPEC+’s Options for Managing the Expected Oil Surplus in 2025?: The OPEC+ alliance prevented an oil surplus this year by delaying plans to restore production.
This helped stabilize prices that had declined due to slowing economic growth in China and increased U.S. supplies.
However, forecasts indicate oil markets could face a surplus in 2025 despite OPEC+ cutting production.
This anticipated surplus is attributed to increased output from non-member countries like the United States, Guyana, Brazil, and Canada,
along with weak global demand growth due to the shift towards electric vehicles and China’s slowing economy.
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The International Energy Agency expects global oil consumption to grow by less than 1% next year
amid weak post-pandemic economic recovery momentum and accelerated shifts towards alternative energy sources.
Meanwhile, global production outside of OPEC+ is expected to outpace this modest consumption growth,
with the United States contributing a significant share of this additional output.
As a result, the agency forecasts an increase in global oil inventories, particularly in the first quarter of 2025.
Despite these expectations, OPEC+ faces challenges adapting its strategy to the new variables.
Delaying plans to restore production could postpone the expected surplus, but pressures from member countries,
such as the UAE, which seeks to increase its output, may hinder these plans.
Saudi Arabia, which relies on high oil prices to finance its economic projects,
faces financial challenges if prices continue to fall.
According to forecasts by Citi Group and JPMorgan,
central banks and consumers might find some relief in the expected price drop to $60 per barrel.
However, this scenario puts pressure on producing countries.
Some analysts believe that OPEC+ may ultimately decide to take more drastic measures,
such as increasing production to counter competitors like U.S. shale oil producers.
However, this is not currently the most likely scenario.
The alliance may continue to delay restoring production to avoid the expected surplus in 2025.
Still, maintaining this policy depends on member states’ internal challenges and external pressures from global markets.
Source: Bloomberg
OPEC+’s Options for Managing the Expected Oil Surplus in 2025