A key driver of global oil markets — strong production growth outside of the Organisation of Petroleum Exporting Countries and its allies (Opec+) led by the United States that matches or exceeds world demand growth — appears to be slowing, according to a new analysis by S&P Global Commodity Insights.
The latest S&P Global Commodity Insights Global Crude Oil Markets Short-Term Outlook expects non-Opec+ crude oil production growth (including condensate) to be 390,000 barrels per day (bpd) lower (829,000 bpd of growth) in the second half of 2024 and 570,000 bpd lower (1,117,000 bpd of growth) in 2025 than the previous month’s forecast.
Lower expectations for US crude production growth are the main reason for the downward revision to the non-Opec+ crude oil production outlook, the report shows. “S&P Global Commodity Insights sees US crude growth for the second half of 2024 coming in at 182,000 bpd, which is 174,000 bpd less than previously expected. US crude oil production growth for 2025 is now expected to be 429,000 bpd, a downward revision of 311,000 bpd,” the research body said in a note.
“The reason for the cut in our US supply growth expectation is simple — there has been less upstream activity so far this year than previously anticipated. That is a reflection of expectations for decelerating demand growth and lower prices. The United States is still on track to produce more oil in 2025 than any other time in history. However, the degree by which it surpasses the previous record has reduced substantially,” said Jim Burkhard, vice president and head of research for oil markets, energy and mobility, S&P Global Commodity Insights.
Weaker US supply growth does not necessarily mean higher prices, the analysis says. Opec+ recently reaffirmed its plans to increase production later this year. With more oil supply from Opec+ coming onstream, the global oil market is still on track to be oversupplied in 2025, according to S&P. “Opec+ can alter production policy at any time, so higher supply is not a foregone conclusion. However, S&P Global Commodity Insights does expect more output as a means to maintain unity within the group,” the report said.
Despite the cut to the US outlook, S&P Global Commodity Insights expects crude oil prices in 2025 to be lower, on average, than in 2024. The pace of supply growth is slowing, but that coincides with decelerating global demand. Factor in the prospect of additional OPEC+ barrels coming into the mix, and it all adds up to a potentially oversupplied crude market in 2025,” Jim Burkhard said.