S&P Global: US/non-OPEC+ oil production growth slowing

Lower production growth outside OPEC+ will narrow the market surplus in 2025 but is still expected to outstrip global demand growth, according to a new analysis by S&P Global Commodity Insights.

The latest S&P Global Commodity Insights Global Crude Oil Markets Short-Term Outlook expects non-OPEC+ crude oil production growth (including condensate) to be 390,000 b/d lower (829,000 b/d of growth) in second-half 2024 and 570,000 b/d lower (1.1 million b/d of growth) in 2025 than its previous month’s forecast.

Lower expectations for US crude production growth are the primary cause for the downward revision to the non-OPEC+ crude oil production forecast. S&P Global Commodity Insights projects US crude growth for second-half 2024 to be 182,000 b/d, which is 174,000 b/d less than previously expected. For 2025, US crude oil production growth is now forecasted to be 429,000 b/d, a downward revision of 311,000 b/d.

“The reason for the cut in our US supply growth expectation is simple—there has been less upstream activity so far this year than previously anticipated. That is a reflection of expectations for decelerating demand growth and lower prices. The US is still on track to produce more oil in 2025 than any other time in history. However, the degree by which it surpasses the previous record has reduced substantially,” said Jim Burkhard, vice-president and head of research for oil markets, energy and mobility, S&P Global Commodity Insights.

However, weaker US supply growth does not necessarily mean higher prices, the analysis says. OPEC+ recently reaffirmed its plans to increase production later this year. With more oil supply from OPEC+ coming, the global oil market is still on track to be oversupplied in 2025. OPEC+ can alter production policy at any time, so higher supply is not a foregone conclusion. However, S&P Global Commodity Insights does expect more output as a means to maintain unity within the group.

Despite the cut to the US outlook, S&P Global Commodity Insights expects crude oil prices in 2025 to be lower, on average, than in 2024.

“The pace of supply growth is slowing, but that coincides with decelerating global demand. Factor in the prospect of additional OPEC+ barrels coming into the mix, and it all adds up to a potentially oversupplied crude market in 2025,” Burkhard said.