Global oil prices are poised to fall below $60 per barrel by year-end as Opec+ accelerates its unwinding of production cuts, catching markets off guard with an aggressive push to reclaim market share.
In a surprise move over the weekend, the group announced a larger-than-expected hike of 548,000 barrels per day (bpd) for August, the fourth consecutive monthly increase in output, and signaled another 550,000 bpd rise in September. These supply additions will effectively complete the rollback of the 2.2 million bpd cuts initiated in 2023.
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Brent crude futures, which briefly spiked near $80 per barrel last month amid the Israel-Iran conflict, have since retreated sharply. As of Tuesday afternoon trading, Brent was hovering at $73.26 per barrel, down 5 per cent year to date, while West Texas Intermediate (WTI) was trading around $68.55, nearly 3 per cent lower since January.
Goldman Sachs analysts, led by Daan Struyven, noted in a research note that Opec+ is deliberately prioritising long-term strategic goals over short-term price support. “The group’s decision to accelerate supply hikes indicates a continued shift towards normalizing spare capacity, reasserting influence over market dynamics, and restraining US shale activity,” the note said. Despite resilient demand in key markets like China, the bank maintains its bearish forecast for Brent to average $59 in Q4 2025 and dip to $56 in 2026.
Adding to the pessimistic outlook, BNP Paribas slashed its year-end Brent forecast by $5 to $55 per barrel. However, the bank sees room for a recovery in 2026 as supply growth — both from Opec and non-Opec producers — is expected to moderate.
Dennis Kissler, senior vice president at BOK Financial, pointed out the market’s choppy movement: “While supply is clearly climbing, demand is surprisingly firm. That tug-of-war is leading to erratic price action.”
The ceasefire between Israel and Iran — announced late last month by US President Donald Trump — has further deflated the war risk premium that had temporarily lifted crude prices. With geopolitical concerns now receding and supply rising, analysts warn that the current surplus could deepen after the peak summer demand season ends.
Behind the scenes, the political undertone of Opec+ decisions is gaining attention. Analysts say the alliance’s swift rollback of supply curbs aligns with President Trump’s vocal calls for lower energy prices. “Opec+ appears to be accommodating Trump’s re-election agenda by easing pressure on pump prices,” said Amrita Sen, chief oil analyst at Energy Aspects.
The alliance’s production strategy involves major producers — Saudi Arabia, Russia, the UAE, Iraq, Kuwait, Kazakhstan, Algeria, and Oman — ramping up output in stages. After a modest 138,000 bpd increase in April, the group added 411,000 bpd in each of May, June, and July, before announcing the outsized August hike. The September boost will not only complete the rollback of 2.2 million bpd cuts but also allow UAE to fully realize its 300,000 bpd quota hike previously negotiated.
Analysts noted that even with an additional 3.6 million bpd in voluntary cuts remaining until 2026, Opec+’s aggressive moves have alarmed US shale producers. According to the Dallas Fed Energy Survey, 88 per cent of US exploration and production firms expect a decline in oil output over the next year if WTI remains at or below $60 per barrel. The strain is already evident: Shell and ExxonMobil have warned of weaker second-quarter earnings due to soft oil and gas prices, with Exxon forecasting a $1.5 billion hit to its bottom line.
Morgan Stanley had earlier projected that global oil majors would face a slump in profits through 2026 due to oversupply. That warning now appears prescient. “With crude markets likely to be flooded well into 2025, the prospect of sustained price weakness is real,” said Jorge Leon, senior VP at Rystad Energy.
Still, there are pockets of contrarian optimism. Some analysts believe strong Asian demand and tighter inventories in Q4 could provide a soft floor around the $60 mark. But for now, the sentiment remains tilted toward a bearish cycle — especially as Opec+ doubles down on volume over value.
Market insiders said unless demand unexpectedly surges or geopolitical tensions reignite, oil prices look set to slide deeper into bear territory as 2025 progresses.
issacjohn@khaleejtimes.com