27/12/2025
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27/12/2025
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Despite pressures on Venezuelan oil exports, the oil market is still oversupplied. The reduction of more than 200,000 barrels of Venezuelan oil has had little impact on overall supply, which exceeds demand by more than 2 million barrels per day. This oversupply has kept Brent crude prices steady at around $61 per barrel.
Kamel Al-Harami
The year is ending with weak price levels, which is expected to continue into the next year. Oil-producing countries may face further challenges, including potential deficits in annual revenue, which could increase reliance on international banks for further borrowing. Many countries hope to secure better borrowing terms than last year, benefiting from experience gained in previous negotiations. Borrowing is the only option for oil-producing countries as oil prices are low and global surplus continues. OPEC+ is not yet prepared to intervene effectively.
Past experience shows that responsibility for stabilizing the market should be shared, not left to OPEC+ alone. Going forward, OPEC should no longer act alone to reduce production. It should call for joint efforts from all oil-producing countries to share the responsibility of output cuts. Overproduction by a few countries that fail to comply with OPEC resolutions must be addressed. Last year at this time, Brent crude averaged $80 a barrel.
Today, one year later, oil is trading around $60– $61 per barrel, which is a drop of $20, with little concern from OPEC+ countries. This suggests that OPEC+ either no longer cares or has grown accustomed to budget deficits and struggles to enforce discipline among its members and nonmembers alike. As a result, the oil market is largely setting its own terms, determining price levels acceptable to consumers, while OPEC+ looks for alternative sources of income. Higher demand is unlikely to provide relief, given the global oil surplus and standby wells ready for production.
Oil prices remain weak, and demand is expected to remain subdued next year, pointing to continued budget deficits. Borrowing seems to be the most viable solution, with international banks welcoming OPEC+ with open arms, backed by massive oil reserves, which is satisfying for both borrowers and lenders.
