Oil & Gas

The World Bank has projected a significant oil glut in 2025, leading to a decline in global commodity prices. According to the October 2024 Commodity Markets Outlook, Brent crude is expected to average $73 per barrel in 2025, down from $80 in 2024. This drop is driven by slower global oil demand growth and a well-supplied market, with supply expected to surpass demand by 1.2 million barrels per day—a level of oversupply only seen during the COVID-19 shutdowns and the 1998 oil crash.

The report highlights that China’s oil demand has flattened due to reduced industrial output and increased adoption of electric vehicles and LNG-powered trucks. Meanwhile, non-OPEC countries like the U.S., Brazil, Canada, and Guyana are ramping up production. In contrast, OPEC+ supply is expected to rise only slightly, assuming the continuation of voluntary output cuts. Oil consumption growth will also slow to about 0.9 mb/d in 2024 and 2025, compared to 2 mb/d in 2023.

In case of a sharp escalation in Middle East tensions that cuts global supply by 2 million barrels per day, prices could temporarily spike to $92 per barrel. However, unaffected producers are likely to respond quickly, bringing prices back down to an average of $84 in 2025. The World Bank emphasizes that declining commodity prices could help developing countries control inflation and reduce fossil-fuel subsidies, though high food price inflation remains a concern.