The year 2025 is shaping up to be a complex and potentially turbulent period for the Organization of the Petroleum Exporting Countries (OPEC). According to analysts from DNB Markets, OPEC could face significant hurdles in maintaining stable oil prices and market equilibrium due to a convergence of challenging factors.
Several critical issues are expected to test OPEC’s strategies in 2025, including a possible oversupply of oil, slower global demand, and the broader implications of OPEC’s production policies.
The core of OPEC’s challenges lies in the anticipated market conditions for 2025. Analysts from DNB Markets predict that the oil market may shift toward a moderate oversupply, even if OPEC continues with its current production cuts.
One of the main concerns is the robust growth in oil supply from non-OPEC countries, which hit a record 3.2 million barrels per day (mb/d) year-over-year (YOY) in 2023. Although this growth is expected to decelerate, it is still projected to average 1.5 mb/d YOY in both 2024 and 2025.
This consistent increase in supply from non-OPEC regions, such as the United States and Brazil, could outpace the anticipated rise in global oil demand.
The situation could worsen if OPEC follows through with its planned reversal of 2.2 mb/d in production cuts in 2025. Without adjustments to this strategy, DNB Markets warns that Brent oil prices could potentially drop to the range of USD 60–70 per barrel.
On the demand side, the outlook remains concerning for OPEC. Global oil demand growth has significantly slowed, with only a 0.9 mb/d increase so far in 2024, down from 2.1 mb/d in 2023. This slowdown is influenced by factors such as weak global GDP growth, a decelerating Chinese economy, and the diminishing effects of the post-pandemic recovery.
DNB Markets analysts estimate that global oil demand growth will likely slow further to 0.95 mb/d YOY in 2024 and 0.98 mb/d YOY in 2025. This sluggish demand, combined with strong non-OPEC supply, leaves OPEC with limited options to increase production without risking a price drop.
Additionally, the analysts suggest that significant geopolitical events would be required to drive oil prices substantially higher, given OPEC’s ample spare production capacity.
The report advises that OPEC may need to reconsider its production strategy. The base case presented by DNB Markets indicates that OPEC might abandon plans to increase production in 2025 to defend oil prices. If OPEC persists with its planned production hikes, the market could face a more pronounced oversupply, resulting in further price declines.
In a worst-case scenario, OPEC could even trigger a full-scale price war, potentially pushing prices below $60 per barrel.
