The US Energy Information Administration predicts that the global oil market may experience a shortage of oil in 2025. This is because demand for consumption is higher than the amount of oil entering the market after OPEC+ decided to extend the production cut period.
Such forecasts have been changed from the previous assessment. The US Energy Information Administration (EIA) expects the market to have a surplus of oil next year. Because the Organization of the Petroleum Exporting Countries (OPEC) and its allies, or OPEC Plus, agreed at a meeting in June to extend the period of oil production cuts until 2025.
OPEC+ has been cutting production since the end of 2022 to support oil prices higher. Amid slowing demand, interest rates are high. And US oil production is at an all-time high.
If the market is short of oil and refineries need to drain oil inventories to meet demand.
The Energy Information Administration said in its monthly report on short-term energy trends that the oil shortage next year will be smaller than this year. Meanwhile, global oil demand will average about 104.7 million barrels per day next year. That compares with about 104.6 million barrels per day of oil. Previous forecasts had said that global oil demand is about 104.5 million barrels per day. The volume of oil is about 104.7 million barrels per day.
The report also said that OPEC+ production has declined, which will make the oil shortage worse for the rest of this year. Global oil demand will exceed supply by about 750,000 barrels per day in the second half of 2024.
The lower supply of oil in the global market will push prices higher. Brent crude prices are expected to average $89 per barrel in the second half of this year, up from $84 per barrel in the first half. The oil market could return to oversupply again from the third quarter of next year if OPEC+ removes production cuts. OPEC+ revealed last month that it will gradually lift voluntary production cuts from October this year.
“We expect the market to return to moderate inventories in 2025 after the voluntary OPEC+ production cuts are lifted in Q4 2024 and as supply growth from non-OPEC+ countries begins to offset the expansion in global oil demand.”
U.S. oil production is expected to rise by 320,000 barrels per day this year to a record 13.25 million barrels per day, slightly higher than the previous forecast of 13.24 million barrels per day.
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