Oil prices are falling once more amid growing supply and weak demand. Brent crude plummeted and is now below $60 a barrel. That's far lower than at the beginning of the year. Analysts warn that it could remain weak unless there is a profound change in supply or demand.
Several oil producers are pumping more. The OPEC+ group recently agreed to add more than 400,000 barrels a day to the market every month through June. This commitment comes after a similar increase in May. The action is to balance varying production levels among member countries. From this group alone, in just two months, global oil supply will rise by close to a million barrels a day.
Meanwhile, other countries, including the United States, Brazil, and Canada, are also pumping more oil. Predictions are that these countries can add about 1.5 million barrels a day of oil by the end of 2025. But demand for oil globally is not expanding so quickly. The difference between supply and demand could create a surplus of nearly a million barrels a day next year.
Shale-oil producers in the U.S. have seen the signs. Some energy companies say that they may not ramp up production more if oil prices can sustain that level—$65 to $75 per barrel. Unless there are substantial technological advances or significant strengthening of market prices, production could remain flat in the near term.
Global tensions also factor into the oil price. Now, some governments are beginning to impose fresh sanctions on vessels used to carry oil out of legitimate trade channels. The measures aim to stop illicit sales linked to a few sanctioned countries. While some supply routes may experience disruptions, the overall oil output remains unaffected.
Market observers see a clear trend. Unless oil producers reduce their supply or global energy consumption increases, prices may continue to decline. Businesses and investors are paying close attention, as the energy sector is a cornerstone of the world economy.
