Despite geopolitical uncertainty weighing on global markets, crude oil prices have stayed within a relatively narrow range, underpinned by firm demand and supply challenges that continue to support energy companies’ earnings outlook.
In a note to clients on Monday, Barclays energy analyst Amarpreet Singh reaffirmed a bullish stance on the sector, highlighting steady consumption trends and ongoing production shortfalls among key suppliers.
Fresh industry data revealed that global oil inventories actually fell during the first half of 2025, defying earlier forecasts that called for a build-up.
“In addition to the lack of inventory build-up in H1 25, evidence of supply constraints among OPEC+ members also bolsters our constructive view on oil prices,” Singh said.
Although OPEC+ officially raised its collective output target by 1.4 million barrels per day by July, the group managed to increase production by only 0.5 million barrels per day, reflecting difficulties among several members in meeting their quotas.
Geopolitics remain a major wildcard. The recent Trump-Putin meeting produced no breakthrough on Ukraine, leaving the door open to fresh sanctions on Russia. At the same time, Iran faces a late-August deadline to return to nuclear negotiations or face broader UN penalties. The U.S. has already moved to tighten restrictions on Iranian crude exports, developments that Barclays believes could further strain supply and keep prices supported.
Outside the OPEC+ alliance, U.S. output has largely followed expectations, though weekly figures suggest a modest pullback since late 2024. Brazil, meanwhile, exceeded forecasts in July, with production approaching 4 million barrels per day as new pre-salt wells began operations.
“Based on the expected development pipeline and our view of base declines, we think oil output growth from Brazil will likely decelerate sharply again next year,” Singh noted.
Looking ahead, Barclays continues to forecast prices above both market futures and the broader consensus. For Brent crude, the bank projects $74 per barrel in Q4 2025 and $70 in Q1 2026, compared with lower levels implied by forward curves. For WTI, the forecast sits at $71 and $67, also topping expectations.
“Oil markets defied expectations of a large surplus in H1 25 and key OPEC+ producers have not been able to keep up with the increase in production targets,” Singh said.
The bank also reiterated its recommendation to remain long WTI calendar spreads, expecting further upside from tightening supply dynamics.
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