January 10, 2025/CSL Research
The December 2024 edition of the OPEC Monthly Oil Market Report (MOMR) showed a eduction in OPEC’s oil output by 50,000 barrels per day (bpd) in December, bringing total production to 26.46 million bpd. This decline was mainly driven by reduced outputs from the United Arab Emirates (UAE) and Iran. The UAE’s production dropped by 90,000 bpd to 2.85 million bpd, primarily due to field maintenance activities. Similarly, Iran’s output decreased by 70,000 bpd, likely impacted by ongoing U.S. sanctions. On the other hand, Nigeria and Libya saw modest production increases of 50,000 bpd each, contributing to a more balanced overall production landscape.
OPEC has adjusted its oil demand growth forecast for 2025, lowering it to 1.45 million barrels per day (bpd) from the earlier estimate of 1.54 million bpd. This revision is driven by weaker demand in major economies, including China, India, and other regions across Asia, the Middle East, and Africa. Despite this downgrade, OPEC’s outlook remains more optimistic than the International Energy Agency’s (IEA) projection, which forecasts a smaller growth of just 950,000 bpd in 2025.
In response to these market dynamics, OPEC has delayed its planned production increase until April 2025, prioritizing price stability over market share. This decision reflects the group’s effort to align supply with softer global demand and stabilize oil prices. As of January 2025, the outlook for oil prices suggests relative stability with a potential for modest declines compared to 2024. Analysts and industry reports indicate that global oil markets are expected to be well-supplied, which may exert downward pressure on prices. In summary, while projections vary slightly, the consensus among industry experts points to relatively stable or slightly lower oil prices in 2025, influenced by factors such as global supply levels, demand growth rates, and geopolitical developments.
The U.S. Energy Information Administration (EIA) anticipates that Brent crude prices will average US$73.58 per barrel in 2025, slightly lower than the 2024 average of US$79.85 per barrel, reflecting expectations of a balanced market with modest stock builds. Vitol, a leading oil trading firm, estimates that oil prices will remain in the US$70 to US$80 per barrel range in 2025, highlighting uncertainties around supply due to geopolitical tensions and potential changes in OPEC+ production strategies.
