Crude oil is not in short supply anywhere on earth. The world has too much crude oil.
The recent increase in oil production by the Organization of the Petroleum Exporting Countries (OPEC) and its allies in May has exacerbated fears of an oversupply on the market.
The supply-side risks are greater because the global demand for oil has been declining over the last year and China is importing less.
There are concerns about the impact of the ongoing tensions in trade between China and the US on the demand for goods from the Asian nation.
Barbara Lambrecht is a commodity analyst with Commerzbank AG. She said that even without a major revision downward, there will be heightened oversupply in the oil markets due to the strong unexpected increase of OPEC+ output since May.
The global oil price is expected to remain low this year.
Commerzbank’s oil forecasts were revised down by the bank last week.
The German bank estimates that Brent crude oil will average $65 per barrel by the year 2025 compared to the $75 estimate previously made.
Commerzbank predicts a small recovery of global oil prices by 2026, as the demand stabilizes and non-OPEC production increases slow down.
This year, the global oil surplus remains an issue.
Non-OPEC Supply
OPEC forecasts that non-OPEC supply of oil is expected to increase by 900 000 barrels per day compared to the previous year in 2025.
The cartel’s monthly Oil Market Report, released on Monday, stated that the US, Canada and Brazil are the main countries expected to grow.
According to Vortexa, seaborne exports from non-OPEC+ countries reached a record high in March, with a 6% increase month-overmonth.
The growth rate is a significant improvement over the trend of stagnation that was observed in 2024.
Source: Vortexa
This surge is primarily due to increased exports of TMX barrels and West Coast Canada from Canada’s West Coast.
Vortexa’s data shows that US exports remained below 4 million barrels a day between February and March of 2025. The US growth in supply, which was responsible for the non-OPEC+ increase in supply in 2023 has slowed, and in some cases even decreased, since 2024.
Eastern World takes in Supply
Rohit Rathod is a senior analyst with Vortexa. He said that the East has played a major role in the growth of the market.
Early in January, US sanctions were imposed on specific vessels, raising concerns over the availability of barrels sanctioned from Russia, Iran and Venezuela.
India, China and other Asian nations were sparked into a panic buy.
Rathod:
The barrels are only now beginning to reach Asia. However, Russian and Iranian releases continue unaffected by sanctions-related logistics challenges.
The availability of barrels is also likely to be increased by the end of the voluntary production cut of OPEC+ from April.
Tankers and oil tanks are rising.
The increase in crude oil exports has not stopped the building of onshore crude stocks. The increase in onshore crude inventories is due to the spring maintenance, and also a decrease in demand for crude oil caused by tighter margins at refineries in the Atlantic Basin.
Rathod said that “alongside stockbuilds we have also increased oil on water, driven by long haul flows from Atlantic Basin into Pacific Basin, on the back of strong East of Suez purchasing.”
Due to several factors, the crude market has grown by 120,000,000 barrels from mid-February.
Source: Vortexa
The market’s reaction to US President Donald Trump’s April 2 announcement on reciprocal tariffs had already shook crude oil prices.
The current price may encourage Chinese buyers to increase their crude stockpiles.
It appears likely that global stockbuilding onshore and offshore will exceed average seasonal highs in Q2.
Prices are doubled
Rathod stated that the OPEC+ bloc announced a reversal of its voluntary production cut on April 3.
Current strategy seems to accelerate the phase out of production reductions by increasing crude production by 411,000 barges per day starting in May.
Brent crude oil has recently dropped below $65 per barrel as a consequence of the unexpected rise in supply.
OPEC+ indicated that the production increase could be halted, or reversed depending upon market conditions.
For now, the Saudi OSPs’ higher-than-expected reduction could be a sign of a willingness to unwind production cuts, gain market share in Asia and increase pressure on noncompliant OPEC+ producer.
The post Crude Oil may not see much upside as an oversupply grips the market could be updated as new developments unfold.
