Is an oversupply of oil dangerous for the global economy?

Key takeaways:

• Analysts (excluding OPEC+) expect a surplus in 2025, because supply growth is running faster than demand.

• Prices holding in the mid-$60s range, despite multiple geopolitical flashpoints, suggest the market is comfortably supplied.

• Seasonal summer demand allowed OPEC+ to unwind some voluntary cuts, but that seasonal lift has faded, leading to a more cautious approach.

• If OPEC+ were to release additional barrels more aggressively, prices would risk collapsing, which explains the slower pace of unwinding barrels in the market.

• Sanctions on Russia add friction and cost, but Russian barrels still reach the market through alternative routes, grey fleets and opaque trading.

• Targeting India with punitive measures may reduce the volume of discounted Russian flows, but is unlikely to stop them completely as the economics of Russian oil remain attractive.

• Global oil demand is still growing, yet the pace of growth is decelerating, which matters more for prices than the absolute volumes alone.

• Producers will face sharper competition in a slower-growth world, as they fight to protect their market share that is expanding more modestly.

• Those with low production costs and low carbon intensity, such as Middle Eastern OPEC producers, will emerge as the long-term winners, as both economics and sustainability criteria converge.

• Qatar’s pushback against EU environmental rules for its LNG exports highlights that producers have options and alternative buyers, meaning Europe does not hold all the leverage.