The OPEC+ group of oil producing countries has agreed to delay an output hike by three months to April 2025, for the third time. After that, the monthly hikes will be spread over 18 months, from 12 months previously.
The decision had no impact on prices, as the benchmark crude Brent remained flat after the announcement.
According to OPEC, world proven crude oil reserves stood at 1,570 bln barrels at the end of 2023, higher by 6 bln barrels than 2022. Proven crude oil reserves in OPEC member countries reached 1,241 bln barrels at the end of 2023.
The outlook for 2025 suggests a 1mln b/d demand growth could be offset by supplies from the US, Brazil and Guyana, forcing OPEC+ to defer output increases further.
At the same time, geopolitical risks remain high, shoring up oil prices.
According to forecasts by S&P Global Commodity Insights, China’s oil demand is expected to grow 1.1% to 17.3 mln b/d in 2024 and gain 1.7% in 2025 to 17.6 mln b/d.
Vitol expects global crude prices to oscillate between $70/b and $80/b in 2025, reflecting some concerns over how demand and supply balances could potentially shape up.
Vitol believes that early assumptions that there will be more crude availability in 2025 may not hold due to questions surrounding Iranian and Venezuelan exports under the new US presidency sanctions.
The EIA said that while the market will remain “managed” by a cohesive OPEC in 2025 intent on preventing builds, 2026 and onwards will see the normalisation of spare capacity.
ExxonMobil and TotalEnergies expect US oil producers to stay disciplined under the new Trump administration, prioritising investor returns over aggressive drilling. Shale priorities have shifted from growth to efficiency and resilience.
The EIA expects US oil output to grow only marginally in 2025, by 100,000 b/d.
Brazil is offering 91 oil blocks across key basins to boost energy security, aiming for an output capacity of 5.3mn b/d by 2030, expecting demand to remain robust.
Oil companies will spend $100 bln on offshore projects by the end of this year, climbing to $140 bln by 2027.
Woodmac said the energy transition is moving slowly and the global economy will continue rely on oil and gas for decades to come. Producing fields will decline, while new projects are needed to maintain supply at current levels, or perhaps even higher for gas for several years.
Exploration is thriving and making money. Since 2015, new field discoveries have created over $160 bln of value after all costs, assuming an industry planning price of $65/b for Brent long term. Full-cycle returns have been consistently in double digits every year since 2015, averaging 15%.
Exploration is being led by the majors and national oil companies, including Qatar Energy and Petronas, which have the access to capital and risk appetite for high-impact exploration.
In India, the number of passenger vehicles is expected to grow by a factor of 4.6 and of freight vehicles by 6.5 by 2070, driving growth in oil demand that – despite growing EV adoption – could be enough to compensate for all the oil saved by global EV adoption.
In Europe, Shell and Equinor will combine their UK offshore oil and gas assets. The new company will be the biggest independent producer in the North Sea.
Bloomberg says BP’s future as a standalone entity is bleak. Investors have lost faith in its strategy, its management and its board. The board should put the UK oil company up for sale andsuggests a merger with Shell.
ExxonMobil and TotalEnergies remain skeptical of a US production surge despite Trump’s pro-drilling push. With the focus on economics and shareholder returns, “drill, baby, drill” seems unlikely.
US crude oil production established a new record in August 2024, reaching an average of 13.4 mln b/d, but is expected to grow only marginally in 2025.
Trump’s oil policy centres on keeping prices manageable for US shale producers and the economy. He has warned OPEC+ that rising prices beyond $80/barrel will not be tolerated.
Dr Charles Ellinas is Councilor at the Atlantic Council
