Global oil market faces supply glut

02/11/2025

Oil markets were overwhelmed with supply. Not only is OPEC+ continuing to increase oil production, but most major oil companies, including ExxonMobil and Chevron, are doing the same, despite knowing the market is already saturated. With U.S. oil prices at around $61 a barrel, the major companies seem unconcerned, possibly looking beyond next year as surplus volumes continue to weigh on prices. Alternatively, they may be following OPEC+’s lead, hoping for a market correction or anticipating last-minute interventions by oil organizations at their upcoming meeting on November 2.

The outcome of that meeting remains uncertain, with possibilities ranging from production cuts to maintaining the current status quo. OPEC+ is concerned that others are benefiting from its upcoming resolutions, while the organization itself may be the last to gain. The repeated practice of reducing and redistributing production quotas has become increasingly ineffective, often favoring non-OPEC countries and major oil companies, and leaving OPEC+ at a disadvantage. As usual, OPEC continues to add new members, some of whom still ignore production cut quotas but remain part of the organization to maintain their status. Meanwhile, major oil companies operate under the assumption that OPEC+ will manage the market and that they will benefit from any actions taken by the organization, both in the short and long term.

The same applies to oil-producing countries, which are pushing for higher OPEC quotas in anticipation of increased future demand. Current projections estimate demand will reach around 106 million barrels per day by 2030, with crude oil prices expected to range between $65 and $75 per barrel. However, with current prices at about $64 per barrel, oil producers face a challenging situation, as many require over $90 per barrel to balance their annual budgets. As a result, borrowing or selling part of overseas investments becomes a necessary option. The alternative, though more difficult, is to cut annual spending and exercise strict discipline over daily expenses. Another practical solution is to introduce taxes and tariffs. While this may initially cause disruption, a gradual and carefully planned implementation can help people adjust over time. A better approach might be to gradually increase gasoline and electricity prices in small increments so that consumers barely notice the impact. Reducing overall expenses is essential, but it must be done gradually, as oil prices are no longer sufficient to meet budgetary requirements. This is the case for most oil-producing countries. It is time to tighten budgets and control spending, as oil revenues can no longer generate a surplus. Oil will remain the core source of revenue and any potential surplus, if it exists.

By Kamel Al-Harami
Independent Oil Analyst
Email: [email protected]