- The IEA reports oversupply, with crude production exceeding demand by 600,000 barrels per day, while the U.S. Energy Information Administration predicts an increase in U.S. crude output, keeping prices weak.
- Despite concerns over tariffs and overproduction by OPEC+ members, market data shows that past demand surprises may lead to price corrections, and the IEA calls for more oil and gas investment.
The International Energy Agency (IEA) reports that crude supply exceeds demand by 600,000 barrels per day (bpd), lowering its annual demand outlook. The world’s biggest oil traders warn of oversupply, citing rising production within and outside the Organisation of the Petroleum Exporting Countries (OPEC).
“The industry is over-drilling now, that is clear,” Gunvor’s chairman told Bloomberg during CERAWeek. “We are drilling more than demand growth allows.”
Gunvor’s chairman told Bloomberg during CERAWeek, “The industry is over-drilling now, that is clear. We are drilling more than demand growth allows.”
The U.S. Energy Information Administration (EIA) predicts U.S. crude output will grow by 400,000 bpd this year, reaching 13.6 million barrels per day. This confirms the United States as the world’s top oil producer and keeps prices weak.
OPEC+ members continue to exceed quotas. Kazakhstan pumped 1.767 million barrels daily in February, surpassing its 1.468 million-barrel quota. Nigeria also overproduced by about 70,000 barrels per day.
Concerns persist that tariffs will raise prices and lower crude demand. Steel and aluminium tariffs could increase oil and gas industry costs, though the effect is expected to be small.
U.S. refining capacity will decline by 400,000 bpd this year. Two refineries, one in Los Angeles and one in Houston, will close in 2025, leaving more crude on the market.
Vitol’s chief executive expects oil prices to stay between $60 and $80 per barrel. He says West Texas Intermediate could briefly drop below $60 per barrel. Overdrilling has caused price drops before, and this could happen again.
An oil analyst claims the world has reached peak oil trading. A Bloomberg report states that international oil trade peaked in 2017 and has declined since due to wind and solar power. The analyst notes that fossil fuel trade across borders has dropped by 5% since 2017 and believes tariff concerns will push for more investment in renewables.
JP Morgan disputes this view. Its latest energy report states that $9 trillion has been spent on wind, solar, electric vehicles, energy storage, and power grids in the last decade, yet the renewable transition remains slow. Renewable energy use increases only 0.3% to 0.6% per year.
Market data suggests oversupply, but past demand surprises show forecasts are not always reliable. Last year, the EIA expected fuel demand to fall in late spring, but it hit a record high. Even the IEA has adjusted its stance. At CERAWeek, the agency’s head called for more oil and gas investment despite stating four years ago that new investments were unnecessary.
For now, oil prices may remain low as supply exceeds demand. However, inaccurate forecasts could lead to a price correction.