Crude Oil Costs Forecast: Conflicting Outlooks From IEA, EIA, and OPEC Confuse the Market…

Richmond Lee, CFA and Senior Market Analyst at PU Prime, commented:

“Oil costs stay caught between bearish structural drivers and short-term geopolitical dangers. Longer-term pressures reminiscent of rising electrical automobile adoption and expectations of upper provide proceed to weigh on sentiment.

On the identical time, renewed tensions within the Russia–Ukraine battle are injecting volatility. Experiences of drone strikes on the Kursk nuclear energy plant in western Russia have heightened uncertainty, whilst U.S. President Donald Trump pursues ceasefire discussions. These developments spotlight the delicate nature of the geopolitical backdrop, with diplomatic progress or escalation prone to drive oil worth swings within the close to time period.

With fundamentals leaning towards oversupply however geopolitics protecting threat premiums elevated, crude oil is anticipated to stay range-bound till clearer course emerges. Merchants ought to watch ceasefire negotiations and U.S. power updates intently for potential catalysts.”

Main Forecast Cut up in 2025 Demand Outlook

The most important disagreement is about how a lot oil the world will use subsequent yr. The IEA thinks world oil demand will develop by simply 680,000 barrels per day (b/d) in 2025. OPEC believes demand will develop virtually twice as quick—by 1.three million b/d. The EIA sits within the center, with a forecast of 980,000 b/d.

This issues for costs. The EIA expects Brent crude to fall from $71 in July 2025 to $58 by the top of the yr, and even decrease in early 2026—presumably to $50. That’s as a result of the EIA sees oil provide rising quicker than demand, which may result in massive stockpiles of unused oil.

The IEA agrees with that view, anticipating world oil inventories to develop by a whole lot of hundreds of barrels per day over the following two years. OPEC disagrees and says the market may really face a scarcity in early 2026.

OPEC Boosts Output, Including Downward Strain

In August, OPEC made a shock transfer by growing oil manufacturing quicker than anticipated. It plans to totally finish its voluntary provide cuts by September 2025, a full yr sooner than deliberate. In September alone, it’s including over 500,000 b/d to the market.

OPEC says it’s doing this to forestall future shortages. It claims that inventories are already low and bringing extra oil to market now is a great transfer. However critics say this might make oversupply worse within the quick time period and push costs down additional.

This provide increase is one motive why merchants are leaning bearish for the following few quarters.

Forecast Strategies Are Inflicting Confusion

One motive for the disagreement is that the businesses use totally different strategies to create their forecasts. The IEA has modified its previous demand estimates a number of occasions this yr. That has made its future projections much less secure. OPEC and the EIA have made fewer modifications.

There’s additionally a giant distinction in how they view China. The IEA expects China so as to add solely 90,000 b/d in new demand in 2025, primarily due to electrical autos and public transport. OPEC and the EIA each count on over 200,000 b/d, saying China’s demand remains to be robust.

The identical break up exists for developed nations just like the U.S. and Europe. The IEA expects demand to fall. OPEC sees small positive factors. These disagreements make it more durable for merchants to belief any single forecast.

Oil Costs Forecast: Bearish within the Quick Time period

With extra oil coming to market and businesses anticipating slower demand, the short-term forecast leans bearish. The EIA’s worth outlook is very weak, and OPEC’s added provide solely provides to that concern.