Oil faces uphill struggle as supply glut worries mount: Reuters poll

A Reuters poll forecasts Brent crude to average $67.65 per barrel in 2025, largely unchanged from current levels, citing an anticipated market surplus driven by rising OPEC+ output and concerns over global demand growth. Analysts suggest major producers are prioritizing market share over higher prices, contributing to a projected oversupply through 2026, while U.S. tariff threats could further curb demand. Despite these pressures, ongoing geopolitical risks are expected to provide a floor for oil prices.

Analysis

A consensus forecast from a recent Reuters poll of 31 analysts indicates a capped outlook for oil prices, with Brent crude expected to average $67.65 per barrel in 2025. This bearish sentiment, reflected in a strongly negative sentiment score of -0.7, is primarily driven by the prospect of a growing supply surplus. The analysis points to a strategic shift by OPEC+, which is perceived to be prioritizing market share over price support, exemplified by a planned production increase of 547,000 barrels per day. Analysts from firms including ABN AMRO and LBBW project this strategy will lead to a significant market surplus in 2025 and 2026, keeping prices suppressed. On the demand side, headwinds include the potential for U.S. tariffs to curb consumption, with global demand growth forecast in a wide range of 0.5 to 1.1 million bpd for 2025. While OPEC's internal forecast is more bullish on demand and less so on non-OPEC+ supply, the prevailing view is that low prices may themselves limit U.S. production growth. A floor for prices is expected to be maintained by a persistent geopolitical risk premium, particularly from the unresolved Russia-Ukraine conflict.

Key Decisions for Investors

• Given the analyst consensus for a supply-driven cap on oil prices, consider underweighting exposure to upstream energy producers and exploring strategies that benefit from a range-bound market.
• Closely monitor OPEC+ production policy and official statements, as the current market-share strategy is the core of the bearish thesis and any pivot back toward price support would be a significant bullish catalyst.
• Evaluate downstream sectors such as transportation, manufacturing, and consumer industries that would benefit from stable or lower energy input costs, while maintaining hedges for potential upside price shocks from geopolitical events.