(Oil Price) – The oil market is bracing for a tough 2025, but Barclays believes the industry’s pessimism might be overdone. Brent crude hovered around $71 per barrel this week, raising chatter of a potential dip into the $50-$60 range next year. But Barclays’ analysts argue that the market’s fixation on oversupply could be cloaking the inevitable tightening of supply-demand dynamics.
Current projections–even without OPEC+ reversing its production cuts–point to a surplus in 2025. Understandably, this has spooked investors away from energy equities. However, Barclays suggests a deeper look at the numbers shows a different story brewing post-2025, with tighter balances potentially driving prices higher, especially by 2026.
Barclays maintains that Brent is likely to spend more time above $70 than below it, citing well-flagged supply-demand fundamentals.
But there’s a caveat. Just the existence of OPEC+’s spare production capacity, whether used or unused, could cap any significant price spikes unless geopolitical surprises, like disruptions in Iranian oil flows, come into play.
Morgan Stanley said on Friday “OPEC+ has given a robust indication that it continues to be willing to balance the oil market.” For the time being, that means holding back supply. But the reverse may also be true—it could unleash more supply just as easily.
This has led investors to be cautious, and understandably so. But with demand trends stabilizing and global supply constraints looming beyond the immediate horizon, it may be premature to write off oil’s resilience.
If Barclays is right, the current negativity could be but a blip.
In a widely anticipated move, OPEC+ earlier this week postponed its planned supply increases by another quarter, and is now pledging to start unwinding output cuts from April 2025 onwards. The move was not enough to convince oil markets of a bullish narrative, not even the postponement of the UAE’s baseline quota increase could stop ICE Brent from dipping back below $72 per barrel.
By Julianne Geiger for Oilprice.com
