Previously, we reported that commodity analysts at Standard Chartered were bullish on oil prices in the current year, thanks to strong oil fundamentals, including declining U.S. supply growth and OPEC+ supply discipline. StanChart reported that non-OPEC+ supply growth fell sharply from 2.46 mb/d in 2023 to 0.79 mb/d in 2024, in large part due to a reduction in U.S. total liquids growth, which fell from 1.605 mb/d in 2023 to 734 kb/d in 2024. StanChart predicted this trend will continue over the next two years, with U.S. liquids growth clocking in at just 367 kb/d in 2025 and 151 kb/d in 2026.  In contrast, a December survey by Haynes Boone LLC revealed that Wall Street is largely bearish, predicting that oil prices will fall below $60 a barrel by the middle of U.S. President Donald Trump’s term.

Well, it appears that the bears can now take their victory lap, with even perma-bulls like StanChart throwing in the towel. StanChart has conceded there’s little hope for oil bulls, and has cut its 2025 forecast by $16 per barrel (bbl) to $61/bbl and its 2026 forecast by $7/bbl to USD 78/bbl. StanChart contends that the Trump administration will have a hard time convincing the markets that its tariff-based policies are not recessionary, with gloom already spreading in the markets after Washington released a worrying economic report on Wednesday. The U.S.  economy shrank -0.3% in the first quarter, marking the first contraction in three years as companies went on a buying spree of foreign goods before Trump’s 90-day pause on final tariffs comes to an end. Thankfully, financial markets avoided going into a meltdown after that report, with the U.S. labor markets remaining relatively healthy. The U.S. economy added 177,000 jobs in April, slightly lower than 185,000 added in March, with the unemployment rate remaining unchanged at 4.2%.

StanChart is also pessimistic about the prospects of some OPEC+ members meeting their output commitments. To wit, the commodity analysts have noted that Kazakhstan has so far been unable to deliver any compensation as earlier agreed. Kazakhstan’s crude output has lately surged, hitting a record high of 2.12 million b/d in February, good for a large 13% increase from January volumes and well above the country’s OPEC+ quota of 1.468 million bpd. Saudi Arabia is mad at quota violators such as Kazakhstan and Iraq for repeatedly exceeding their set targets, and is ready to open the taps. Whereas the current Brent price is more than $30/bbl below the $96.20/bbl that Saudi Arabia requires to balance its books, OPEC’s largest producer has ample alternative funding options it can rely on to weather low oil prices, including issuing sovereign debt or tapping foreign exchange reserves.

Related: Imperial Oil Q1 Earnings Rise on Higher Refining Margins

The experts have also pointed out that Saudi Arabia can take advantage of the low tariff rates on GCC nations by the Trump administration by becoming a regional manufacturing powerhouse. Trump slapped all six GCC nations with 10% tariffs.

 “As tariffs rise in certain countries, we are likely to see a growing shift of business to the GCC [Gulf Cooperation Council], whether through nearshoring or friendshoring,” Adel Hamaizia, a Gulf expert at the Harvard Belfer Center Middle East Initiative, told Middle East Eye.

“Saudi Arabia should be sending their trade representatives to the Trump administration right now, asking, ‘What was China providing you. Tell us what it is and we will make it in Saudi Arabia and provide a great trade deal’,” Ellen Wald, founder of the energy consulting firm, Transversal Consulting, told MEE.

Manufacturing is a big part of MBS’ Vision 2030. Unlike Europe, Saudi Arabia has ready access to lots of cheap energy, minimal regulations and plenty of open spaces. Further, Saudi Arabia has laid out plans to accelerate its $2.5 trillion mining programs in a bid to diversify its economy and lower its reliance on oil. Mining will play a key role in Riyadh’s strategy to reduce oil dependency, with Saudi Arabia looking to exploit its significant reserves of copper, bauxite, phosphate and gold. Last year, the country’s mining minister, Bandar Al-Khorayef, announced that the Kingdom’s reserve potential had grown to $2.5 trillion, a big 90% jump from the $1.3 trillion forecasted eight years ago. Saudi Arabia has a goal for the mining sector to contribute $75 billion to the country’s economy by 2035, up rom $17 billion currently.

By Alex Kimani for Oilprice.com

More Top Reads From Oilprice.com