Oil prices resumed their downward trajectory in late April and early May as trade tensions impacted financial and commodity markets and OPEC+ agreed to a further unwinding of production cuts. Bearish sentiment subsequently eased somewhat after the United States reached a trade deal with the United Kingdom on 8 May, and a 90-day accord with China on 12 May. Nonetheless, increased trade uncertainty is expected to weigh on the world economy and, by extension, oil demand. Brent crude oil futures slumped by $14/bbl in April to a four-year low of just above $60/bbl by early May, before rebounding to around $66/bbl at the time of writing.
Signs of a slowdown in global oil demand growth may already be emerging and will be tracked closely. Following a relatively robust 1Q25, latest non-OECD delivery data, especially for China and India, have been weaker than expected. We now see growth at a more subdued rate of 650 kb/d for the remainder of 2025, resulting in an average annual increase of 740 kb/d – followed by a rise of 760 kb/d in 2026. Despite the recent soft patch, emerging economies remain the main driver of growth, adding 860 kb/d this year and 1 mb/d next year – in contrast to an accelerating decline in OECD countries of -120 kb/d and -240 kb/d, respectively.
Amid the weaker outlook for the world economy and global oil demand, OPEC+ surprised the market in early May by announcing a second consecutive monthly increase of 411 kb/d for June, effectively advancing the bloc’s production to levels it had previously scheduled for October 2025. The actual gain will be lower than the nominal figures, as a number of countries – including Kazakhstan, the UAE, Iraq and Russia – continue to produce above their targets, while others are constrained by capacity limits and some will make compensatory cuts for previous overproduction. Taking into account the new supply targets through June, OPEC+ looks set to pump an additional 310 kb/d this year and 150 kb/d in 2026. A further tightening of sanctions enforcement on Venezuela, Iran and Russia may yet offset some of those increases.
Meanwhile, one of the most immediate impacts of the recent slump in oil prices is expected to fall on US shale output. In their latest earnings calls, independent producers said they would opt to trim rig counts and shave up to 9% off previous 2025 capital expenditure guidance. As a result, we have lowered our forecast for US light tight oil production for the second month in row, by 40 kb/d in 2025 and 190 kb/d in 2026. US total supply growth is now assessed at 440 kb/d and 180 kb/d, respectively, reaching 20.9 mb/d in 2026. As US tight oil growth slows, conventional projects will underpin non-OPEC+ supply increases of 1.3 mb/d this year and 820 kb/d in 2026.
With the rises in global supply expected to considerably outpace demand growth, oil inventories are forecast to jump by an average of 720 kb/d this year and 930 kb/d next year, compared with a decline of 140 kb/d in 2024. This sets the stage for a further rebalancing of supply and demand fundamentals.