Global oil markets

Global oil prices
Significant growth in oil supply will cause crude oil prices to fall in the coming months. In our forecast, the Brent crude oil spot price falls from $71 per barrel (b) in July to $58/b in 4Q25 and $49/b in March and April 2026. On August 3, OPEC+ members again agreed to accelerate their scheduled production increases. The 2.2 million barrels per day (b/d) of production cuts announced in November 2023 and initially scheduled to be fully unwound by September 2026 will now be fully unwound by September of this year. We expect this increase will contribute to large inventory builds through 2026, putting significant downward pressure on oil prices.

We now forecast global liquid fuels production will rise by 2.0 million b/d on average in the second half of 2025 (2H25) compared with 1H25. OPEC+ will contribute half of this increase. Non-OPEC producers led by the United States, Brazil, Norway, Canada, and Guyana provide the other half. At the same time, we expect global liquid fuels demand in 2H25 will be up 1.6 million b/d from the first six months of the year, meaning the pace at which oil is put into inventory will accelerate by almost 0.5 million b/d in 2H25. With inventories already building at a rate of 1.4 million b/d in 1H25, we now expect inventories will build by 1.9 million b/d in 2H25 and 2.3 million b/d in the first quarter of 2026 (1Q26). During similar periods when global inventory builds exceeded 1 million b/d for a sustained time period—including 2020, 2015, and 1998—crude oil prices declined by 25%–50% from the previous year.

Inventory builds of this size will cause market participants to seek increasingly expensive options for storing crude oil. As available commercial storage on land fills, other methods such as floating storage or strategic stock building might be increasingly used to match large imbalances between supply and demand. In this case, crude oil prices will fall to reflect the higher marginal cost of storage.

We expect that prices dropping below $50/b will cause some producers to reduce supply. Particularly, we expect that OPEC+ will reduce crude oil production by 0.2 million b/d in 2026 compared with 4Q25. Some non-OPEC countries that rely on supply from short-investment cycles will also see oil production drop. Most notable among these countries is the United States, where we expect annual average crude oil production in 2026 will decrease 0.1 million b/d on average from the record in 2025.

Falling oil prices will also cause a small increase in demand in 2026. Combined with the slowdown in supply, we expect inventory builds will moderate slightly. Inventory builds in our forecast fall to near 1 million b/d in 2H26, which we expect will push the Brent price back to an average of $54/b in 4Q26.

Significant uncertainty is still present in our price forecast. Although we do not currently forecast any major supply disruptions, risks to oil supply remain. A break in the Israel-Iran ceasefire and elevated tensions or additional sanctions related to the Russia-Ukraine conflict could affect supply and could offset the supply growth from non-OPEC countries. The evolution of ongoing trade negotiations between the United States and its trading partners could affect economic and oil demand growth, with implications for oil prices. Additionally, this forecast does not take into account the potential supply effects from tariffs on India related to purchases of crude oil from Russia, which could affect the trade and supply of crude oil depending on how these countries adjust. Lastly, the potential for OPEC+ to revisit production plans given the expectations of significant oversupply beginning later this year could affect future production levels and limit the downward pressure on oil prices.