The global oil market is set for its largest supply surge in a decade, with nearly 3 million barrels per day expected in 2025, according to Raymond James. Key contributors include Kazakhstan’s Tengiz field, Brazil’s Bacalhau field, and Saudi production expansions.
However, analyst Pavel Molchanov warns that low prices and weak demand growth could delay these projects.Reuters’ Clyde Russell noted a disconnect between bullish China oil demand forecasts and weakening import figures, possibly reflecting a return to normal demand patterns. Global supply is expected to exceed demand, with projections varying: the U.S. EIA estimates a 100,000 bpd surplus, Raymond James expects 280,000 bpd, and the IEA predicts 600,000 bpd. This surplus could delay new supply in 2025.
The oil industry faces limits on production growth due to economic constraints. U.S. shale drilling remains uneconomical at current prices, while Saudi Arabia is restricted by OPEC+ quotas. A demand surge is unlikely, but potential U.S. sanctions on Iran’s 1.6 million bpd exports could tighten supply, temporarily boosting prices. However, new supply remains poised to enter the market.New oil output hit 800,000 bpd last year, with even higher additions expected in 2024.
Despite weak demand, IEA chief Fatih Birol now stresses the need for upstream oil and gas investments to ensure energy security, marking a shift from his previous stance on phasing out hydrocarbons.
This new supply is being developed because, despite weaker-than-expected demand growth—partly due to the focus on China—the world still consumes vast amounts of oil, with demand continuing to rise, though at a slower pace than post-pandemic levels.
