BAKU, Azerbaijan, June 18. Fitch Ratings is predicting a possible surplus by 2025 amidst recent developments and projections, Trend reports.
Brent crude oil prices experienced significant volatility, reaching $90 per barrel in April amid heightened Middle East tensions before retracting as geopolitical concerns eased. The subsequent decision by OPEC+ in early June to phase out additional output cuts, totaling 2.2 million barrels per day (MMbpd) by September 2025, has intensified concerns about oversupply.
According to Fitch Ratings, this move, coupled with robust oil production levels in the United States and increasing global inventories, is expected to tip the market into surplus territory in the coming years. OPEC+ has indicated that the reintroduction of these production volumes will depend on market dynamics and could be adjusted accordingly. The coalition's substantial spare capacity, estimated at 5.9 MMbpd, is poised to mitigate potential oil price spikes and manage geopolitical risk premiums effectively.
Looking ahead, Fitch Ratings anticipates a slowdown in global oil demand growth. The International Energy Agency forecasts an increase of 1.1 MMbpd in 2024, a notable decline from the 2.3 MMbpd growth observed in 2023. This deceleration reflects expanding electric vehicle adoption, efficiency gains, and moderated growth in Chinese oil consumption. China, which saw a surge of nearly 1 MMbpd in oil demand in 2023 due to a post-pandemic rebound in mobility, is expected to increase demand by only 0.3 MMbpd in 2024.
In contrast, global oil production is projected to experience restrained growth in 2024, primarily due to disciplined output measures by OPEC+. However, production is anticipated to accelerate beyond 1 MMbpd in 2025, driven by robust increases in non-OPEC+ production, particularly from the United States, Canada, and Brazil.
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