Investing.com — Wells Fargo analysts predict a shift in global oil market dynamics by mid-2025, forecasting improved fundamentals and stronger prices following a period of oversupply.
They estimate a surplus of 1 million barrels per day (mmbpd) in the first half of 2025, despite OPEC+ production cuts.
“Downside price risks exceed upside ones until mid-2025,” the analysts noted, but they expect better conditions in the second half of the year.
The bank maintains a long-term price deck of $80 for and $75 for WTI, supported by decelerating U.S. shale production and Saudi Arabia’s preference for prices above $70 per barrel.
While U.S. shale output growth is minimal at 0.3 mmbpd year-to-date, Wells Fargo (NYSE:) says structural industry changes, including consolidation and a focus on returns, have restrained excessive production growth.
OPEC+ is expected to prioritize price stability through disciplined production management.
“We expect OPEC+ to err towards supporting oil prices and restraining production for the foreseeable future. We base this view on its most recent actions of deferring production increases,” said Wells Fargo.
However, they note that uncertainties remain, including global demand trends, trade tensions, and potential geopolitical conflicts.
The analysts also highlighted the possibility of significant impacts from U.S. policies under a second Trump administration, particularly regarding sanctions on Iran, which could curb Iran’s oil exports by up to 1.4 mmbpd.
Wells Fargo’s outlook reflects confidence in a gradual market recovery, with oversupply giving way to improved demand-supply balance and higher oil prices by the latter half of 2025.
