International Energy Agency (IEA) has predicted that by 2025, the global supply of crude oil will surpass its demand, despite a projected increase in demand during 2024.
This expected decline is primarily attributed to China, the world's second-largest consumer of fossil fuels, which is shifting towards enhanced production of electric vehicles (EVs).
Meanwhile, OPEC member states and Russia, collectively known as OPEC+, continue to reduce oil production in an effort to bolster prices.
However, other major producers, including the United States, are poised to ramp up their output to ensure market supply stability.
According to the IEA, if OPEC and its allies ease production cuts, the global oil supply could exceed demand by an additional one million barrels per day in 2025, driven largely by reduced consumption in China.
A report by JP Morgan, a US-based multinational investment bank, forecasts that oil prices could drop to $60 per barrel in 2025.
Concurrently, OPEC+ has indicated that global demand for crude oil may rise to an average of 990,000 barrels per day in 2025.
The IEA report further notes that non-OPEC+ nations could see an average daily increase of 1.5 million barrels in oil production by 2025, with the United States, Canada, Guyana, and Argentina playing key roles in this growth.
The prospect of a lower interest rate by the US Federal Reserve recently led to a more than 2% decline in crude oil prices.
On Friday, Brent crude, the international oil benchmark, fell by $1.52 or 2.09%, settling at $71.04 per barrel.
Similarly, the price of West Texas Intermediate (WTI) dropped by $1.68 or 2.45% to $67.02 per barrel.
Compared to the previous week, the prices of Brent and WTI were down by 4% and 5%, respectively.
Rabobank International, a Dutch multinational bank and financial services provider, reported that an additional 700,000 barrels per day could be supplied to the market in 2025.
This anticipated surplus stems from OPEC and its allies departing from their ongoing production reduction trend, leading to increased market supply and a consequent drop in prices.
