Tariff uncertainty and rising OPEC+ supply weigh on oil prices

A recent Reuters poll indicates analysts are maintaining largely unchanged oil price forecasts for 2025, with Brent averaging $67.84/bbl and WTI at $64.61/bbl. However, rising OPEC+ supply, including a 548,000 bpd increase for August, coupled with U.S. tariff uncertainty potentially dampening global demand, is expected to create an oversupply scenario. This imbalance is projected to drive prices lower in the second half of 2025 and into 2026, with Brent forecast at $62.98/bbl by Q2 2026, despite some supporting geopolitical risk premium.

Analysis

Analyst consensus for 2025 oil prices remains largely static, with a Reuters poll of 37 economists forecasting Brent crude to average $67.84 per barrel and WTI at $64.61. However, this stability masks a developing bearish outlook for the second half of 2025 and into 2026, where Brent is projected to fall to $62.98 by the second quarter. The primary market pressure stems from a growing supply and demand imbalance. On the supply side, eight OPEC+ members are increasing output, with a 548,000 bpd hike confirmed for August and a similar increase likely for September. This rising supply coincides with significant demand-side risks, most notably the uncertainty surrounding potential U.S. tariffs from the Trump administration, which could dampen global economic growth. Analysts from ABN AMRO and NORD/LB explicitly highlight this mismatch, anticipating an oversupply scenario driven by slower demand growth in late 2025. A persistent geopolitical risk premium, tied to conflicts in Ukraine and the Middle East, is providing a price floor, keeping Brent in the upper-$60s and preventing a more immediate decline.

Key Decisions for Investors

• Given the consensus forecast for declining prices in H2 2025 and 2026, investors holding long positions in crude oil may consider implementing hedging strategies or trimming exposure, using the current geopolitical support as a potential window.
• Closely monitor near-term catalysts, specifically the outcome of the August 1 U.S. tariff deadline and the August 3 OPEC+ meeting, as these events could significantly impact the timing and magnitude of the expected price correction.
• The core investment thesis hinges on a developing oversupply; therefore, continuously track OPEC+ production data against global demand indicators to validate or challenge the bearish outlook.