S&P: U.S./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 the latest S&P Global Commodity Insights Outlook

The Outlook expects non-OPEC+ crude oil production growth (including condensate) to be 390,000 bpd lower (829,000 bpd of growth) in the second half 2024 and 570,000 bpd lower (1,117,000 bpd of growth) in 2025 than the previous month’s forecast.

Lower expectations for U.S. crude production growth are the main reason for the downward revision to the non-OPEC+ crude oil production outlook. S&P Global Commodity Insights forecasts U.S. crude growth for the second half of 2024 at 182,000 bpd, which is 174,000 bpd less than previously expected. U.S. crude oil production growth for 2025 is now expected to be 429,000 bpd, a downward revision of 311,000 bpd.

“The reason for the cut in our U.S. 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 United States 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.

Potential oversupply

Weaker U.S. 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, although OPEC+ can alter production policy at any time. Despite the cut to the U.S. 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,” said Burkhard.

The IEA in its latest monthly report also mentions the “marked slowdown in Chinese oil demand growth", projecting global oil demand growth at slightly less than 1 mn bpd in both 2024 and 2025.

The IEA also notes the “Olympic levels of volatility” in the oil markets in recent weeks, with persistent geopolitical tensions in the Middle East and some relatively positive macroeconomic data pushing prices higher in the second week of August following tumbling prices in July and early August.