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Day: May 27, 2025

Oil Prices Under Pressure From the Prospect of Another OPEC+ Hike

Crude oil prices slid further today after a weak start to the week, following reports that OPEC+ was discussing a greater than originally planned production hike for July. These reports have been circulating for a few days now, fueling pessimism among traders and forecasters. At the time of writing, Brent crude was trading at $64.60 per barrel while West Texas Intermediate was at $61.30, after last week both recouped some of their earlier losses on reports about a more or less imminent Israeli strike on Iranian nuclear facilities. “Crude oil edged lower as the market contemplated the outlook for rising OPEC supply,” ANZ analysts said earlier today in a note, as quoted by Reuters. On the other hand, ING analysts noted President Trump’s concession to the EU, which delayed the entry into effect of 50% tariffs to early July in case the two failed to seal a new trade deal. Also on the bullish side, President Trump threatened Russia with more sanctions after intensified strikes on Ukraine that followed a large-scale Ukrainian attack on Russian territory. As for OPEC+, the Dutch bank’s analysts have assumed that the group will indeed add another 411,000 barrels to its output in July, ensuring that the international oil market is well supplied during the second half of the year. Meanwhile, in an update on the ongoing attempt to negotiate a nuclear deal between the United States and Iran, the latter’s president, Masoud Pezeshkian, said that the country will be able to survive even if no deal is negotiated and sanctions remain in place. “It’s not like we will die of hunger if they refuse to negotiate with us or impose sanctions,” Pezeshkian said, as quoted by Iranian state media. “We will find a way to survive.” If the two do reach a deal, the U.S. will likely lift sanctions on Iran’s oil industry, which would boost international flows of Iranian crude, depressing prices.

Goldman Sachs Doubles Down on Bearish Oil Outlook Despite Rising Demand

Goldman Sachs analysts issued yet another update to their oil price forecast, reiterating expectations of weaker prices this year and next, on the back of substantial growth in non-OPEC supply—excluding U.S. shale. In a note, the analysts said “oil production growth from non-OPEC ex Russia ex shale top projects will likely accelerate to 1MB/d over the next two years”, adding that natural gas liquids production was also set for a rise over the period, thanks to the launch of new projects in Saudi Arabia and Qatar. The exclusion of U.S. shale from the prediction for non-OPEC output growth is quite significant, seeing as non-OPEC production forecasts normally focus on U.S. shale. Yet with prices depressed, producers in the shale patch have begun to retrench, and production growth is already slowing down. Indeed, Goldman’s analysts said that if prices remained subdued over the next two years, the peak in U.S. shale production growth could come earlier than previously expected. There is, however, a possibility that Goldman Sachs analysts are overestimating the supply situation: UBS said in an update that global visible oil inventories over the first quarter pointed to a tightly balanced market – not the substantial surplus Goldman and others have assumed, Kpler’s Amena Bakr wrote on X earlier today. The Swiss bank said it expected revisions in both supply and demand projections on the basis of the new data. Goldman has a 2025 price forecast of $60 per barrel for Brent crude and $56 per barrel for West Texas Intermediate. Goldman’s analysts expect the benchmarks to fall further next year, to $56 for Brent crude and $52 for WTI. The forecast has not been revised upwards despite a revision in demand projections, with the bank now expecting stronger demand growth this year, at 600,000 barrels daily, and 400,000 barrels daily in 2026.