Global Economy Resilient, Non-OPEC+ Supply Growth Trimmed
On Monday, OPEC (Organization of the Petroleum Exporting Countries) projected that the global economy will maintain its resilience through the second half of 2025. This optimistic outlook comes despite ongoing concerns about trade. While the report notably did not mention the recent Israel-Iran conflict, it kept its forecasts for global oil demand growth unchanged for both 2025 and 2026, after having reduced them in April.
A robust global economy, coupled with a slowdown in oil supply growth from producers outside the wider OPEC+ group, could make it easier for OPEC+ (which includes OPEC, Russia, and other allies) to stabilize the oil market. Rapid increases in oil production, particularly from U.S. shale and other non-OPEC+ countries, have historically put downward pressure on oil prices. OPEC emphasized that the global economy has “outperformed expectations” in the first half of 2025, providing a strong foundation and momentum for a sound second half, though quarterly growth is expected to moderate slightly.
Oil Prices and OPEC+’s Strategy
Despite the positive economic outlook, oil prices saw a significant jump recently, nearing $80 a barrel on Friday. This surge followed air strikes by Israel and Iran, raising concerns about regional oil supply. This comes after weeks of price pressure from OPEC+’s output hikes and U.S. President Donald Trump’s tariffs.
Interestingly, sources have indicated that one of the motivations behind OPEC+’s decision to increase oil output more rapidly in May, June, and July than initially planned is to challenge U.S. shale production and regain market share.
Non-OPEC+ Supply Forecasts and Tight Oil
In its report, OPEC specifically reduced its forecast for oil supply from countries outside the Declaration of Cooperation (the formal name for OPEC+). It now expects this supply to increase by approximately 730,000 barrels per day (bpd) in 2026, which is a 70,000 bpd reduction from its previous month’s forecast.
More specifically, OPEC now anticipates U.S. tight oil (shale) output to hold steady at 9.05 million bpd next year. This is a revision from its earlier forecasts, which had predicted small year-on-year growth and, in January, had even projected 2026 output to reach 9.28 million bpd. OPEC attributed this revised forecast for tight oil to assumptions of “sustained capital discipline, further drilling and completion efficiency gains, weaker momentum in drilling activities and increased associated gas production in key shale oil regions.”
OPEC+ Production in May
The report also revealed that OPEC+ oil production increased by 180,000 bpd in May, reaching 41.23 million bpd. This figure is less than the 411,000 bpd hike that was mandated by the group’s quota increase for May. The actual rise in production was smaller than the headline quota increase for a couple of reasons: some nations, like Iraq, reduced their output to fulfill previous pledges to compensate for earlier over-pumping, and Kazakhstan’s output also declined. Kazakhstan, which is currently facing pressure to improve its adherence to OPEC+ quotas, saw its production fall by 21,000 bpd in May to 1.803 million bpd, which is still above its allocated quota.
This discrepancy between planned and actual output highlights the complexities and challenges of managing compliance within the OPEC+ alliance.
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