(Investing) – The oil market is anticipated to a see a “big surplus” from the fourth quarter onwards, driven in large part by the return of OPEC+ producer group barrels over the next 12 months, according to analysts at HSBC.
In a note to clients, the strategists led by Kim Fustier forecast a surplus growing from 600,000 barrels per day in the second quarter to 1.7 million barrels per day in the final three months of 2025 and 2.4 million barrels per day in 2026.
These comments come after a monthly report from the International Energy Agency last week said world oil output is now anticipated to be higher than previously forecast this year, even as supply could be dented by sanctions on Russia and Iran.
Global oil production is projected to rise by 2.7 million barrels per day in 2025, compared to a prior estimate of 2.5 million bpd, the IEA said. Next year, the figure is seen increasing by a further 2.1 million barrels per day.
Markets are assessing plans for elevated production by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+. On Sunday, the group agreed to raise production by a cumulative 137,000 bpd in October, much lower than hikes of about 555,000 bpd and 411,000 bpd in earlier months.
But the IEA flagged that the outlook for supply is facing conflicting trends, with the possibility of fresh international penalties being placed on Russia and Iran. So far, harsher sanctions have had a “modest impact” on supply and trade flows, the IEA noted, despite exports from both of the countries trending lower in recent months.
Still, a separate report from OPEC itself made no change to its relatively elevated forecasts for oil demand growth in 2025 and next year.
Although could be pushed higher by the potential sanctions on Russia in particular, the HSBC analysts argued that the “oil market is oversupplied and could absorb significant disruptions.”
Oil prices rose on Monday, extending recent gains after Ukrainian drone strikes on Russian energy infrastructure. At 09:17 ET (13:17 GMT), Brent futures climbed 0.6% to $67.40 a barrel, and futures rose 0.8% to $63.21 a barrel.
Both contracts gained more than 1% last week as Ukraine stepped up attacks on Russian oil infrastructure, including a strike on the largest oil exporting terminal Primorsk and the Kirishinefteorgsintez refinery, one of the two biggest refineries in Russia.
(Reuters contributed reporting.)
