BAKU, Azerbaijan, May 8. Stronger supply growth in 2025 is expected to lead to global oil inventory builds of 0.4 million b/d, causing prices to drop to an average of $85 per barrel next year, Trend reports.
According to the US Energy Information Administration Agency (EIA), voluntary OPEC+ production cuts are having a positive impact on global oil inventories in 1H2024.
"The spot price of Brent crude oil averaged $90/b in April, up $5/b from March and the fourth consecutive monthly increase. However, daily crude oil spot prices have since fallen, and the Brent spot price settled at $84/b on May 2. Prices increased in April due to falling global oil inventories. Geopolitical tensions also supported crude oil prices amid conflict between Iran and Israel, which added uncertainty to already heightened tensions in the Middle East. Despite these tensions, crude oil price volatility has been subdued for much of this year by significant spare crude oil production capacity," the EIA says.
The agency's analysis indicates that global oil inventories are decreasing by an average of 0.3 mb/d during this period. Thus, the EIA expects some OPEC+ members to continue limiting production even after the current voluntary cuts expire at the end of June.
This ongoing production restraint is likely to result in a relatively balanced oil market in 2H2024, maintaining oil prices around $90 per barrel for the rest of the year, the agency added, noting that significant uncertainty persists, particularly regarding developments in the Middle East, which could elevate oil price volatility and trigger sharp increases in oil prices.