Insights from the OPEC January 2025 Monthly Oil Market Report

The latest OPEC Monthly Oil Market Report provides a comprehensive view of the global economy and its influence on oil markets, including projections for supply and demand in 2025 and 2026. Below is a detailed analysis of the key findings, with a focus on the global economy, oil supply, and demand, and the potential geopolitical implications.

1. Global Economic Outlook for 2025 and 2026

Global economic growth is forecasted to maintain steady momentum, with a projected growth of 3.1% in 2025, accelerating slightly to 3.2% in 2026. This positive trajectory is supported by expected inflation normalization and adjustments in monetary policies across major economies.

Regional Breakdown:

• United States: The US economy is forecasted to grow by 2.4% in 2025 and 2.3% in 2026, buoyed by strong consumer spending and industrial recovery.

• Eurozone: Growth in the Eurozone remains modest, with projections of 1% in 2025 and 1.1% in 2026, constrained by lingering inflationary pressures.

• China: Growth in China is estimated at 4.7% for 2025 and 4.6% for 2026, as domestic consumption and exports stabilize.

• India: India leads among major economies with robust growth of 6.5% in both years, driven by infrastructure development and industrial expansion.

• Russia and Brazil: Russia’s economy is expected to grow by 1.9% in 2025 and 1.5% in 2026, while Brazil’s growth is forecasted at 2.3% in 2025 and 2.5% in 2026.

Economic resilience in developing economies, particularly in Asia and Latin America, will significantly influence global oil demand.

2. World Oil Supply for 2025 and 2026

Production Projections by Region:

1. OPEC Member Countries:

   • OPEC crude oil production is projected to average 40.65 mb/d in 2025, with a marginal increase expected in 2026 as global demand stabilizes.

   • Saudi Arabia is forecasted to maintain disciplined production at around 10.5 mb/d, aligning with OPEC+ strategies to balance the market.

   • Iran: Iran’s output is expected to remain steady at approximately 3.3 mb/d, with potential for increases contingent on geopolitical developments and sanctions relief.

2. Non-OPEC Countries:

   • United States: US liquids production is forecasted to grow by 0.5 mb/d annually, driven by expansions in the Permian Basin and Gulf of Mexico.

   • Russia: Production is projected at 10.8 mb/d, but geopolitical tensions and sanctions could create supply uncertainties.

   • Canada: Output is expected to increase by 0.3 mb/d annually, supported by continued investment in oil sands projects.

   • Venezuela: Despite challenges, Venezuela’s production could stabilize around 0.8 mb/d, conditional on foreign investment and infrastructure improvements.

Geopolitical Influences:

• Trump Presidency: If Donald Trump reassumes office in 2025, US energy policies could shift, emphasizing domestic oil production and reducing regulatory constraints, potentially increasing global supply.

• Russia-Ukraine Conflict: Prolonged conflict in Eastern Europe may disrupt supply chains and impose further sanctions on Russian oil.

• Middle East Tensions: Escalations in the Middle East, particularly involving Iran and Saudi Arabia, could result in supply disruptions and price volatility.

3. World Oil Demand for 2025 and 2026

Global oil demand is forecasted to grow by 1.4 mb/d annually, reaching 102.7 mb/d in 2025 and 104.1 mb/d in 2026. This demand growth is driven by economic recovery and increased industrial activity in non-OECD countries.

Regional Demand Outlook:

• United States: Demand is expected to rise marginally, driven by growth in the transportation sector and petrochemical feedstock requirements.

• China: As the world’s largest oil importer, China’s demand is forecasted to grow steadily by 0.4 mb/d annually, supported by industrial expansion and infrastructure projects.

• India: India’s oil demand is projected to increase by 0.3 mb/d annually, fueled by rising mobility and urbanization.

• Other Asia: Southeast Asian economies will contribute 0.2 mb/d annually to demand growth, reflecting increased transportation and industrial activity.

• Latin America: Demand is expected to grow by 0.1 mb/d annually, primarily from Brazil and Mexico.

Impact of Geopolitical Events:

• Refinery Utilization: A Trump presidency could boost refinery capacity utilization in the US, increasing exports of refined products to Latin America and Asia.

• Sanctions and Trade Wars: Heightened trade tensions, particularly involving China and the US, could dampen demand growth in key markets.

• Energy Transition Policies: Accelerated adoption of renewable energy and electric vehicles in OECD countries may moderate demand growth.

Additional Considerations:

• Refineries and Product Markets: Global refinery margins are projected to remain stable, but regional disparities may emerge, with Asia-Pacific benefiting from rising demand for petrochemicals and transportation fuels.

• Strategic Reserves and Stock Movements: The depletion of strategic reserves, especially in OECD countries, could amplify price sensitivity to supply shocks.

• Price Forecasts: Crude oil prices are expected to remain range-bound, with Brent crude averaging between $75-$85/b in 2025 and 2026, influenced by OPEC+ production strategies and global economic conditions.

Conclusion

The oil market in 2025 and 2026 will be shaped by a delicate balance of economic recovery, supply dynamics, and geopolitical influences. While robust demand from developing economies provides a bullish outlook, risks from geopolitical tensions and energy transitions remain significant. Policymakers and market participants must navigate these complexities to ensure market stability and sustainable growth.

THIS REPORT WAS FULLY WRITTEN BY THE CHATNRG NATGAS AGENT