OPEC+ Increases Production Gradually, Oversupply Risk Looms Market
World oil prices rose slightly in trading on Monday (September 8th), supported by the OPEC+ decision to increase production at a slower pace. However, projections of a global supply surplus continue to loom over the market and weigh on the future price outlook.
The Organization of the Petroleum Exporting Countries and its allies (OPEC+) decided to increase production by 137,000 barrels per day starting in October. This decision was seen as a compromise: maintaining market share without destabilizing prices.
The market responded with a slight price increase. Brent closed at around US$66.25 per barrel and WTI at US$62.59 per barrel. "The production increase was implemented more cautiously, given that several member countries are approaching their capacity limits," the Financial Times reported.
Although prices are currently stable above US$60, several research institutions have warned of a weakening trend ahead. S&P Global Commodity Insights estimates Brent will fall to around US$55 per barrel by the end of 2025, while the EIA projects an average of just US$58 per barrel in the fourth quarter and potentially reaching US$50 per barrel in early 2026.
The main factor pressuring prices is the potential for a global production surplus of more than 2 million barrels per day, driven by OPEC+ measures and additional supply from other major producers.
On the demand side, global growth is expected to be unable to absorb the surge in supply. The International Energy Agency (IEA) projects demand to only increase by around 680,000 barrels per day throughout 2025, far lower than the additional supply of around 2.5 million barrels per day.
However, geopolitical tensions in the Middle East and China's aggressive purchases of its strategic reserves are said to still have the potential to provide short-term price support.
Overall, oil fundamentals point to a bearish trend for the remainder of this year. Although prices have strengthened slightly today, the medium-term outlook remains clouded by the risk of oversupply. Technically, Brent currently faces strong resistance in the US$67.00–68.00 area, while the nearest support is at US$61.50. As long as the price moves below US$68.00, the short-term trend remains bearish, with the potential for a retest of the US$60.00–61.00 zone.
Source: Newsmaker.id
