Jun 13, 2025
OPEC+ is counting on increased demand during the summer as a surplus is expected in the fourth quarter.
The OPEC+ group likely anticipated strong demand during the peak summer driving season when it accelerated oil production increases in May, and market developments suggest this was a correct assumption.
Analysts project that demand growth will keep pace with supply growth at the end of the second quarter and the beginning of the third quarter.
However, as autumn and the fourth quarter approach, the market may experience an oversupply, which could affect oil prices and overall market sentiment.
Analysts and major investment banks foresee an oil surplus late this year into 2026, with expectations that oil prices will not exceed $60-$65 per barrel in the fourth quarter of 2025 and early 2026.
OPEC+’s recent increase of 411,000 barrels per day (bpd) for July, marking the third consecutive month of hikes, indicates that the group will have reinstated over 60% of the planned 2.2 million bpd supply increases by the end of July, according to ING's commodities strategists.
They also predict that OPEC+ will continue these substantial supply increases, suggesting that the full 2.2 million bpd will be restored by the end of the third quarter, a year ahead of the initial schedule.
This scenario serves as ING’s baseline, which underpins its forecast of Brent Crude averaging $59 per barrel in the fourth quarter.
Despite the ongoing production increases from OPEC+, oil prices have not dropped significantly, partly due to geopolitical factors and the belief that the market can accommodate higher OPEC+ supply during peak demand.
Frederic Lasserre from Gunvor Group cautions against betting against the market ahead of the seasonal demand increase, noting that while demand is expected to remain strong for now, uncertainties loom post-third quarter.
Analysts expect a bearish outlook for the fourth quarter and 2026, with HSBC predicting Brent Crude prices around $65 per barrel later this year, though this may be overly optimistic if OPEC+ continues to boost production, resulting in a larger surplus after summer.
HSBC's latest scenario anticipates steady increases from October to December, leading to a full unwinding of the 2.2 million bpd voluntary cuts by the end of 2025.
Currently, the market is balanced, but post-third quarter hikes could elevate the surplus beyond earlier expectations, raising concerns about downward pressures on oil prices and the $65/b assumption for the fourth quarter.
Goldman Sachs expects OPEC+ to implement its final production hike in August at the standard rate of 411,000 bpd.
Ole Hansen from Saxo Bank notes that crude oil prices have remained stable since the latest OPEC+ production hike, supported by rising gasoline and distillate consumption ahead of the summer peak.
The U.S. benchmark, WTI Crude, benefits from high refinery demand, low inventory levels, and disruptions to Canadian production due to wildfires. In Cushing, Oklahoma, crude inventories recently dropped to a ten-year seasonal low of 23.5 million barrels, compared to a ten-year average of 35.1 million barrels.
This tight market situation contributes to sustained elevated time spreads in futures markets, reflecting strong near-term demand.
However, all forecasts could change dramatically if tensions between the U.S. and Iran worsen or if major economies suffer significantly due to U.S. trade policies.
Oil prices spiked to a seven-week high recently as reports indicated the U.S. State Department might order non-essential personnel to leave its embassy in Baghdad amid rising security concerns linked to stalled nuclear talks with Iran.
On the economic front, the World Bank noted that increased trade tensions and policy uncertainties are expected to lead to the slowest global growth rate since 2008, aside from outright recessions, due to President Trump’s tariffs, which have prompted growth forecast cuts in about 70% of economies.
Saxo Bank's Hansen explained that the uncertainty surrounding President Trump's fluctuating tariff policies has heightened fears of a global economic slowdown, leading to greater short-selling activity, with some macro-focused hedge funds using oil as a hedge against declining global growth.
Analysts project that demand growth will keep pace with supply growth at the end of the second quarter and the beginning of the third quarter.
However, as autumn and the fourth quarter approach, the market may experience an oversupply, which could affect oil prices and overall market sentiment.
Analysts and major investment banks foresee an oil surplus late this year into 2026, with expectations that oil prices will not exceed $60-$65 per barrel in the fourth quarter of 2025 and early 2026.
OPEC+’s recent increase of 411,000 barrels per day (bpd) for July, marking the third consecutive month of hikes, indicates that the group will have reinstated over 60% of the planned 2.2 million bpd supply increases by the end of July, according to ING's commodities strategists.
They also predict that OPEC+ will continue these substantial supply increases, suggesting that the full 2.2 million bpd will be restored by the end of the third quarter, a year ahead of the initial schedule.
This scenario serves as ING’s baseline, which underpins its forecast of Brent Crude averaging $59 per barrel in the fourth quarter.
Despite the ongoing production increases from OPEC+, oil prices have not dropped significantly, partly due to geopolitical factors and the belief that the market can accommodate higher OPEC+ supply during peak demand.
Frederic Lasserre from Gunvor Group cautions against betting against the market ahead of the seasonal demand increase, noting that while demand is expected to remain strong for now, uncertainties loom post-third quarter.
Analysts expect a bearish outlook for the fourth quarter and 2026, with HSBC predicting Brent Crude prices around $65 per barrel later this year, though this may be overly optimistic if OPEC+ continues to boost production, resulting in a larger surplus after summer.
HSBC's latest scenario anticipates steady increases from October to December, leading to a full unwinding of the 2.2 million bpd voluntary cuts by the end of 2025.
Currently, the market is balanced, but post-third quarter hikes could elevate the surplus beyond earlier expectations, raising concerns about downward pressures on oil prices and the $65/b assumption for the fourth quarter.
Goldman Sachs expects OPEC+ to implement its final production hike in August at the standard rate of 411,000 bpd.
Ole Hansen from Saxo Bank notes that crude oil prices have remained stable since the latest OPEC+ production hike, supported by rising gasoline and distillate consumption ahead of the summer peak.
The U.S. benchmark, WTI Crude, benefits from high refinery demand, low inventory levels, and disruptions to Canadian production due to wildfires. In Cushing, Oklahoma, crude inventories recently dropped to a ten-year seasonal low of 23.5 million barrels, compared to a ten-year average of 35.1 million barrels.
This tight market situation contributes to sustained elevated time spreads in futures markets, reflecting strong near-term demand.
However, all forecasts could change dramatically if tensions between the U.S. and Iran worsen or if major economies suffer significantly due to U.S. trade policies.
Oil prices spiked to a seven-week high recently as reports indicated the U.S. State Department might order non-essential personnel to leave its embassy in Baghdad amid rising security concerns linked to stalled nuclear talks with Iran.
On the economic front, the World Bank noted that increased trade tensions and policy uncertainties are expected to lead to the slowest global growth rate since 2008, aside from outright recessions, due to President Trump’s tariffs, which have prompted growth forecast cuts in about 70% of economies.
Saxo Bank's Hansen explained that the uncertainty surrounding President Trump's fluctuating tariff policies has heightened fears of a global economic slowdown, leading to greater short-selling activity, with some macro-focused hedge funds using oil as a hedge against declining global growth.