The decision by OPEC+ last Sunday to increase output from October caught investors by surprise and sent oil prices sinking to below $78 per barrel early in the week. Ahead of the meeting, investors had expected that the cuts would be rolled over for the rest of this year.
Oil prices have since partially recovered to $80 per barrel (Brent) at the time of writing. In the near term, prices could rise further as we estimate that the oil market will be in a sizeable deficit over the Northern Hemisphere Summer. That’s if OPEC+ is compliant with its existing output targets – something that is by no means guaranteed. Only throughout 2025 should prices fall substantially lower as greater OPEC+ supply should push the market into being broadly balanced by the end of Q4.
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