A significant factor in global oil markets — the robust production growth outside of OPEC+ led by the United States, which either meets or surpasses global demand growth — seems to be decelerating, according to recent analysis from S&P Global Commodity Insights. The latest S&P Global Commodity Insights Global Crude Oil Markets Short-Term Outlook predicts a reduction in non-OPEC+ crude oil production growth (including condensate) to 829,000 barrels per day (bpd) in the second half of 2024, a decrease of 390,000 bpd from the previous forecast, and to 1,117,000 bpd in 2025, a decrease of 570,000 bpd. The main cause for this downward adjustment in the non-OPEC+ crude oil production outlook is the reduced expectations for US crude production growth, as indicated by the report.
S&P Global Commodity Insights estimates US crude growth for the second half of 2024 at 182,000 bpd, a reduction of 174,000 bpd from earlier projections. For 2025, US crude oil production growth is now anticipated to be 429,000 bpd, marking a downward revision of 311,000 bpd. The decrease in upstream activity this year, which was less than previously expected, is reflective of the anticipated slowing demand growth and lower prices. Despite this, the United States is expected to produce more oil in 2025 than ever before, although the extent of this increase has been significantly reduced, according to Jim Burkhard, vice president and head of research for oil markets, energy and mobility at S&P Global Commodity Insights.
The analysis suggests that weaker US supply growth does not automatically translate to higher prices. OPEC+ has recently reiterated its intention to boost production later this year. With additional supply from OPEC+ entering the market, the global oil market is still projected to be oversupplied in 2025, according to S&P. OPEC+ has the flexibility to change its production policy at any time, so increased supply is not guaranteed. However, S&P Global Commodity Insights anticipates higher output as a strategy to preserve unity within the group.
Despite the reduced outlook for the US, S&P Global Commodity Insights forecasts that crude oil prices in 2025 will average lower than in 2024. The slowing pace of supply growth coincides with a deceleration in global demand. Considering the possibility of additional OPEC+ barrels entering the market, this could lead to an oversupplied crude market in 2025, as noted by Jim Burkhard.
