Market News

By Yongchang Chin

(Bloomberg) -- The move by OPEC+ to delay a revival of supply to April will pare global oil output next year, tightening balances somewhat, but a glut is still widely expected, according to banks and industry consultants.

Banks including Morgan Stanley raised price forecasts modestly after the decision by the group, which was in line expectations heading into the meeting. Still, higher supply, especially from nations outside OPEC+ in the Americas, as well as poor demand from China, remain major concerns.

With global benchmark Brent trading little changed near $72 a barrel on Friday, here’s a summary of what analysts say about the group’s decision:

Morgan Stanley: ‘Still Surpluses’

Morgan Stanley nudged up Brent forecasts for the third and fourth quarters of 2025 to $70 a barrel, from $68 and $66, respectively. Next year’s global glut would total 800,000 barrels a day, down from 1.3 million, according to analysts including Martijn Rats, citing expectations for the market’s total liquid balance.

“Those are still surpluses, which therefore still suggest softness in oil prices. However, they are smaller than we estimated before,” the analysts said. With the latest plan, “OPEC+ has given a robust indication that it continues to be willing to balance the oil market,” they said.

ING: Limiting the Downside

“Expectations for a smaller surplus mean that downside for Brent is likely more limited in 2025 than initially expected,” said Warren Patterson, head of commodities strategy at ING Groep NV. The full-year Brent outlook was raised to $71 a barrel from $69, even as a continued surplus tempered bullishness.

HSBC: Basic Problem Remains

OPEC+’s extended phasing out of cuts will still leave considerable spare capacity of about 5.2 million barrels a day at the end of 2026, according to analysts including Kim Fustier. “Further delays do not solve OPEC+’s basic problem that non-OPEC production is set to grow faster than demand over 2025-2026, leaving the group no space to unwind its cuts,” they said.

The one hope for OPEC+ is that a more vigorous enforcement of existing sanctions on Iran by the Trump administration could reduce oil exports and open up some space for other members to increase their output, they said.

Rystad Energy: ‘The Group Is Worried’

“Trump’s tariff-forward stance toward China and persisting weak demand provided the group with all of the encouragement needed to extend production cuts until he first quarter of 2025,” said Mukesh Sahdev, global head of commodity markets. “The announcement makes crystal clear that the group is worried about both a potential supply glut, and a lack of compliance with production targets among member countries.”

Standard Chartered: Lower Supplies

“We do not think the market has priced in the full extent of how much oil has been removed,” Standard Chartered Plc analysts including Emily Ashford and Paul Horsnell said in a note.

Following the latest delay, more than half of the planned increase in supply from OPEC and its allies won’t now be delivered, the analysts said. Under its earlier format, about 496 million barrels would have been added next year by the cartel. Now, that’s only about 191 million, it said.

Commonwealth Bank of Australia: Longer Than Wanted

“The new OPEC+ plan over 2025 and 2026 is a tacit admission that it will take longer than OPEC+ wanted to restore their oil production,” said Vivek Dhar, an analyst. “The latest OPEC+ decision starkly contrasts with the resolve OPEC+ showed in June when the group thought it would be in a comfortable position to start reversing its voluntary supply cuts by October 2024.”

UBS: OPEC+ ‘Remains United’

“The extension of the production cuts signals to us that the group remains united,” said Giovanni Staunovo, a strategist. “The group does not intend to flood the oil market; instead, it aims for a balanced oil market.”

He continued: “While prices are likely to stay volatile in the near term, we expect falling inventories this year and a closely balanced market next year, in contrast to market expectations for a strongly oversupplied market, to support prices over the coming months.”