Output cuts: A worker at the main processing hub of the Kashagan offshore oil field in the Caspian Sea in western Kazakhstan. Barclays expects Opec and its allies to phase out the additional voluntary adjustments by October 2025. — Reuters
LONDON: Barclays has lowered its Brent oil price forecast by US$4 per barrel (bbl) to US$66/bbl for 2025 and by US$2 to US$60/bbl for 2026, citing the decision by the Organisation of the Petroleum Exporting Countries and its allies (Opec+) to accelerate oil production hikes.
“Tariff-related developments have certainly been a drag, but the Opec+ pivot has also been a significant driver of the move lower in oil prices of late,” Barclays said in a note last Sunday.
Opec+, which includes the Organisation of the Petroleum Exporting Countries and allies such as Russia, agreed to accelerate oil production hikes for a second consecutive month, raising output in June by 411,000 barrels per day, the group said last Saturday.
Opec+ sources have said Saudi Arabia is pushing the group to accelerate the unwinding of earlier output cuts to punish fellow members Iraq and Kazakhstan for poor compliance with their production quotas.
Barclays noted that the Opec+ decision is more related to strength in underlying fundamentals and external influence than concerns about member overproduction.
Brent crude futures fell more than US$2/bbl in early trade yesterday, and traded at US$59.20 as of 10.50 Malaysian time.
Barclays now expects Opec+ to phase out the additional voluntary adjustments by October 2025, but also expects slightly slower US oil output growth.
Overall, this loosens their balance estimates by 290 thousand barrels per day (kbd) for 2025 and 110 kbd for 2026, it said.
Barclays also revised its baseline view on Opec+, expecting the group to continue its accelerated path of phasing out additional voluntary adjustments, and now sees it taking effect in six months from the initial plan of 18.
“That would result in 390 kbd and 230 kbd increases in our 2025 and 2026 Opec crude forecast, respectively,” Barclays said.
Barclays forecast a decline in US crude output by 100 kbd from the fourth quarter of 2024 to the fourth quarter of 2025, and by 150 kbd in 2026. — Reuters
