Global oil markets

Global oil prices and inventories
The Brent crude oil spot price averaged $74 per barrel (b) in November, $1 less than the average in October. Crude oil prices fell slightly in November following a ceasefire between Israel and Hezbollah in Lebanon. The ceasefire removed some of the risk premium present in oil prices, which had reflected the potential for attacks on oil infrastructure and a disruption to oil supplies. In addition, signs of weakening global oil demand growth, primarily centered on slowing oil demand growth in China, continued to weigh on prices.

On December 5, OPEC+ members agreed to delay production increases that were set to begin in January 2025 until April 2025. At the meeting, the group also announced production targets through 2026. Our forecast assumes OPEC+ will generally raise production in line with the new target levels through much of 2025, as the announced targets align with the production that we expect will keep oil markets relatively balanced next year.

We expect global oil inventories will end 2025 near their current volume. We estimate that ongoing OPEC+ production cuts have contributed to global oil inventory withdrawals of about 0.4 million barrels per day (b/d) on average in 2024, and we expect that the extension of OPEC+ production cuts will cause inventories to fall by 0.7 million b/d the first quarter of 2025 (1Q25). However, we expect the subsequent ramp up in OPEC+ production and continued supply growth outside of OPEC+ will lead to an average inventory build of 0.1 million b/d over the remainder of 2025.

We forecast that inventory builds will put some downward pressure on crude oil prices later in 2025, with Brent falling from an average of $74/b in 1Q25 to an average of $72/b in 4Q25. In our forecast, the 2025 annual average Brent price is $74/b, down from an average of $80/b this year.

As discussed in the November STEO, we continue to see at least two main sources of price uncertainty: the course of the ongoing Middle East conflict and OPEC+ members’ willingness to adhere to voluntary production cuts. The volatility and risk premium associated with the conflict in the Middle East moderated in recent weeks before prices increased again on December 9 following Syrian President Bashar al-Assad’s ouster. An escalation in the regional conflict has potential to reduce oil supplies, and regional political uncertainty can increase the risk premium. Second, although we assess that OPEC+ producers will likely continue to limit production below recently announced targets in 2025, the potential for weakening commitment among OPEC+ producers to continue cutting production adds downside risk to oil prices.

Global oil production and consumption
Countries that are not part of the OPEC+ agreement are driving increases in global liquid fuels production this year, and we forecast that trend will continue in 2025. We estimate that global liquid fuels production has increased by 0.6 million b/d in 2024. Production outside of OPEC+ is up 1.9 million b/d this year, led by growth in the United States, Canada, and Guyana, but that growth has been partly offset by a 1.3 million b/d reduction in production from OPEC+ participants.

We expect global production of liquid fuels will increase in 2025 by more than 1.6 million b/d, with almost 90% of the growth coming from countries outside of OPEC+.

Oil consumption growth in our forecast continues to be less than the pre-pandemic trend. We forecast that global consumption of liquid fuels will increase by 0.9 million b/d in 2024 and 1.3 million b/d in 2025, which are both less than the pre-pandemic 10-year average of 1.5 million b/d of annual growth, as well as below the oil demand growth seen during the 2021–2023 pandemic recovery.

Non-OECD countries drive almost all global oil consumption growth in our forecast. Much of this growth is in Asia, where India is now the leading source of global oil demand growth in our forecast. We expect India will increase its consumption of liquid fuels by 0.2 million b/d in 2024 and by more than 0.3 million b/d in 2025, driven by rising demand for transportation fuels. We forecast China’s liquid fuels consumption will grow by less than 0.1 million b/d in 2024 and by almost 0.3 million b/d in 2025. We estimate that OECD oil consumption will be relatively unchanged across 2024 and 2025, with a slight decline this year and a slight increase next year.