OPEC keeps oil demand forecasts for 2025 and 2026, expecting a strong economy in late 2025

    by VT Markets
    /
    Jun 16, 2025
    OPEC’s latest monthly report predicts a strong global economy in the second half of 2025, following a better-than-expected first half. They expect non-OPEC oil supply to rise by 730,000 barrels per day (bpd) in 2026, down from their earlier estimate of 800,000 bpd. They also anticipate that US shale production will stay stable that year. In May, OPEC+ increased crude output by 180,000 bpd. Oil prices saw WTI crude reaching $77.49, but later dropped to $71.98, which is $1.00 lower. This drop was influenced by improved relations between Iran and Israel. Overall, the report suggests a positive view for the global economy as we approach 2025’s second half. OPEC, which stands for the Organisation of the Petroleum Exporting Countries, is now expecting slower growth in non-OPEC oil supply for 2026, cutting back their forecasts. They note that US shale oil production is likely to remain stable, which means fewer disruptions. Meanwhile, OPEC+ increased its total crude production by 180,000 bpd in May, even as they try to stabilize prices through coordinated supply measures. In the oil market, WTI crude futures rose towards $77 earlier this month but fell back to just under $72 by the session’s end. This decrease in price is largely tied to signs of improved relations in the Middle East, easing concerns of new conflicts that typically drive up energy prices. The combination of a tightening supply outlook for next year and easing geopolitical tensions suggests it’s time for caution. For traders dealing with crude oil derivatives, especially futures and options, the message is clear: we find ourselves in a situation where economic optimism is balanced by the realities of supply adjustments and lower headline risks. The revised expectations for non-OPEC output point to smaller chances of oversupply in 2026, especially as US shale contributions are likely to remain steady. This might help support prices next year. However, the increase in May production may limit price rises unless demand strengthens or new policies from OPEC+ emerge. Volatility in oil often increases with changes in sentiment. The recent price drop, despite generally solid supply data, indicates that sentiment may now be more influenced by reduced geopolitical risks than supply concerns. We should continue to monitor this trend and watch for key producers to signal future supply coordination. With the relatively small price changes—even amid increased output—implied volatility for short-term contracts may be nearing a reevaluation point. Demand for tail risks could decline if Middle East tensions stay calm. The gap between near-term futures may also narrow, so those managing calendar spreads will need to adjust their strategies more carefully. Currently, signs of breakout risk on the upside seem minimal, which may indicate that options skews are overpriced—particularly for longer contracts. Traders should reassess their positions, focusing on delta and vega exposures, as the market appears to be adjusting more to macro growth rather than just physical supply factors. The update weakens any assumptions that rapid US shale growth will disrupt the balance in 2026. OPEC’s revised outlook reduces uncertainty around future supply but emphasizes a market more influenced by demand dynamics rather than unexpected supply changes. We must keep monitoring forward curves, particularly from Q3 onwards, to see if the focus shifts back to demand. While market direction may not change dramatically, price discovery remains active. As we move into the coming weeks, it’s vital to keep positioning flexible and responsive.

    here to set up a live account on VT Markets now

    see more

    Back To Top
    Chatbots