Oil downturn amid ample availability

13/12/2025

Yes, oil prices are not expected to recover soon. U.S. crude is at $57, while Brent crude is trading at $61 a barrel, causing huge strain on producers and exporters. Low prices and reduced income are creating shortages in their year end budgets. Independent oil operators are also facing financial losses, while oil producing countries are under pressure and turning to global banks for further aid, seeking more borrowings and extended payment terms. Many are still hoping for a recovery by the end of next year or within the next 12 months. Oil has dropped surprisingly to the low $50s, a level not seen for a long time, last occurring in late 2020. OPEC+ is not willing to cut volume for the benefit of other producers or allow them to benefit from OPEC+ sacrifices.

The concerning part is that oil prices may remain weak beyond 2026. OPEC+ will need to act and manage the situation effectively or consider enlarging its group, as current measures of reducing production and quota adjustments are no longer effective. The ample availability of crude oil globally is pushing prices down, with OPEC+ neither willing nor in a position to act alone. It is time to consider a new strategy with closer engagement with consumers. However, with excess crude available, all producers are focused on marketing and selling their production at any price that secures both short- and long-term contracts, or to lock in customers and ensure a stable market. The forecast for oil prices over the next two years is expected to remain within the range of $55 to $58 per barrel.

This estimate is based on marketing sources projecting a surplus of more than two million barrels per day next year, with similar levels expected in 2027. The increase is driven by rising U.S. crude production and Brazil’s push for higher output, bringing regional oil availability to around 106 million barrels per day, representing an annual growth of more than 1.7 million barrels per day. The new oil growth in Brazil and Guyana in Latin America, expected in 2025-2026, is projected to exceed one million barrels per day, bringing Brazil’s production close to six million barrels per day. This will add more crude oil to the global market, pushing prices down to the $55–$58 range and potentially causing further decline in crude oil prices.

The influx of additional barrels, combined with a possible ceasefire and settlement in the ongoing Russia-Ukraine war, could further weaken oil prices. OPEC+ may have limited ability to intervene, and if this additional volume hits the market, it could trigger panic selling and push prices closer to the $50 level. There is certainly no positive news. Meanwhile, OPEC+ has no plans to correct or stabilize oil prices, and quota reductions and production cuts are no longer effective. New mechanisms must be found to restore oil prices to an acceptable level, well above the low $50s. OPEC must act, and act quickly. As has been suggested for some time, OPEC+ may need to turn to international banks for long-term borrowing, as weaker oil prices are expected to persist unless decisive action is taken by OPEC.

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