Oil Prices Slip Amid Concerns Over Supply Surplus Despite OPEC+ Cuts

Oil prices softened on Friday, reflecting persistent market concerns about a looming supply surplus in 2025, even as OPEC+ extended its production cuts through the end of 2026.

Brent crude futures dipped by 0.9%, trading at $71.43 per barrel, while US West Texas Intermediate (WTI) fell 1% to $67.65 per barrel as of midday trading. On a weekly basis, Brent was on track for a 2% decline, with WTI poised to fall 0.5%.

OPEC+—a coalition of the Organization of the Petroleum Exporting Countries and its allies, which produces nearly half of the world’s oil—delayed the phased increase in oil output to April 2025. This marks another extension of deep production cuts originally slated to ease in October 2024. The decision reflects the group’s response to a combination of tepid global demand, particularly in China, and increased production from non-OPEC+ countries.

UBS analyst Giovanni Staunovo expressed optimism about the decision, noting that it highlights OPEC+ unity in maintaining market balance. “The extension of production cuts reassures investors that the group is firmly committed to stabilizing prices,” Staunovo said.

Despite these efforts, analysts continued to warn of a supply glut next year, though forecasts vary. Bank of America predicts growing surpluses could push Brent crude to average $65 per barrel in 2025, despite expectations for global oil demand to grow by 1 million barrels per day (bpd) in 2024. Conversely, HSBC revised its surplus forecast downward, estimating a smaller surplus of 0.2 million bpd compared to an earlier projection of 0.5 million bpd.

The broader market has seen Brent crude trading within a narrow $70-75 per barrel range in recent weeks, as investors grapple with mixed signals—weak demand from China and geopolitical tensions in the Middle East weighing heavily on sentiment.

PVM analyst Tamas Varga captured the cautious mood, stating, “The market remains trapped in its narrow range. While short-term factors may briefly push prices higher, the medium-term outlook appears bearish.”

For now, OPEC+ continues to steer the oil market carefully, balancing short-term market shocks against longer-term uncertainties, as traders remain skeptical of significant price momentum heading into 2025.