Do sub $60 oil prices beckon in H2 2025?

The second half of the current crude oil trading year was ushered in by a larger-than-expected output hike by OPEC+ over the weekend, just ahead of the first week's trades in Asia. The market was largely pricing in a 411,000 bpd hike like the previous month, but got a whopping 548,000 bpd uptick instead. 

The latest addition effectively unwinds nearly 90% of the "voluntary" OPEC+ cuts in place since 2022. Here is the Oilholic's take on it via a column for Forbes. Unmistakably, this is a very bearish development. But it is also a statement of intent that OPEC is more than willing to take the fight to non-OPEC producers in a bid for a higher market share. 

Of course, non-OPEC production - especially that of the US - continues to go from strength-to-strength, at least for now, until production hedges unwind in the next 12 to 18 months. Until then it might well be a buyers' market with likely lower, even sub $60 per barrel Brent prices in a glut-ridden market. 

And speaking of the US, here is yours truly's latest Energy Connects column on how that record high US production has effectively reset the global energy market's risk premiums, as recent events in the Middle East have demonstrated.   

The said events, i.e. the Israel-Iran conflict and the bombing of Iran's nuclear facilities by the US, were the subject of The Oilholic's most recent appearance on TRT World's Round Table programme. Escalating tensions brought home long-held market anxieties - about energy cargoes in the Strait being disrupted as well as higher risk premiums - to the fore once again. 

Together with fellow guests on the programme, yours truly discussed why the closure of the Strait would be an act of self-harm for Iran, why Tehran simply won't (and didn't) do it, and ultimately why oil prices failed to hold on to the gains following a cessation of hostilities, courtesy of a well-supplied market and lacklustre demand growth. 

Here's an upload of the broadcast via TRT World's YouTube stream. Have a listen in if interested. Well that's all for the moment folks! More musings to follow soon. Keep reading, keep it here, keep it 'crude'! 

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© Gaurav Sharma 2025. Photo: Gaurav Sharma on TRTWorld's Round Table programme in June 2025 © TRT World, 2025.

'R-OPEC' or OPEC? All about Russia at Helferstorferstrasse 17

The Oilholic has negotiated some serious snowfall to arrive at Helferstorferstrasse 17, OPEC's secretariat in Vienna, Austria for the 173rd OPEC Ministers' meeting. 

The winter wonderland that the Austrian capital has transformed into overnight should make the Russians feel right at home. That's because all the soundbites here are about the Russians, and what they may or may not agree to this time around. 

The collective OPEC and non-OPEC production cut, pegged at 1.8 million barrels per day (bpd) in May, is valid until March 2018. So the question is a simple one where from here? The Gulf exporters led by Saudi Arabia want a nine month extension beyond that to cover most of 2018. However, Russian oil minister Alexander Novak is not so keen on the idea, questioning why OPEC wants to extend a deal that is yet to expire.  

Here's some overnight analysis for Forbes. Sooner or later Russia will part company with OPEC and the many in the market are cognizant of that.

And here's the first report from OPEC for IBTimes UK. Plenty more from here soon, but that's all for the moment folks! Keep reading, keep it 'crude'!

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© Gaurav Sharma 2017. Photo: View of snowfall on Westbahnhof / Europaplatz, Vienna, Austria, November 30, 2017. 

Oil bulls being cautious in Zurich

The Oilholic finds himself in the financial hub of Zurich, Switzerland for a splash and dash trip and afterhours ‘crude’ banter here suggests oil bulls are being cautious ahead of the 30 November OPEC and non-OPEC oil ministers’ meeting.

Market anticipation that the ongoing 1.8 million barrels per day (bpd) production cuts would be rolled over beyond March 2018 has sent the Brent front month contract well north of the $60 per barrel mark. As yours truly was boarding his flight out of London, Brent was trading at $60.73 per barrel and heading higher, notching its highest level since July 2015 and marking a rise of more than 36% from the lows seen in June. Some are quite excited.

Take Paul Mumford, fund manager at Cavendish Asset Management, for instance. He notes: “With each dollar trickling straight through to the bottom line, if prices remain at these levels we’d see a rapid increase in oil firms’ cash flows – something that could mean a significant shake up. Asset values would increase sharply in line with projected earnings, banks would be more relaxed about borrowings and farm-out agreements would become easier and more lucrative.

“The lives of mature fields may be extended deferring steep decommissioning costs, exploration would become increasingly viable, and project financing should be easier to obtain. Higher prices could also be an incentive for consolidation in the industry. The downside however might be that we see an increase in drilling costs, but this would benefit the oil service companies. There is every reason to have confidence in the oil market – $50 a barrel and below is a struggle, $55 is good and $60 and above means cigars for everyone!"

Be that as it may, oil market observers in Zurich, and the few who kindly made their way from Geneva to speak to the Oilholic, say the situation warrants caution.

Spot Brent lags a good $3-plus per barrel. And while it’s all good to go long based on the daily newsflow in the run-up to the OPEC meeting, the absence of an exit strategy by those partaking in the production remains a big question-mark.

If the cuts are rolled over – as is appearing increasingly likely – folks here in Zurich opine, and the Oilholic concurs, that the bears would only be going into hibernation for a limited time. The cuts have to end at some point.

Away, from the oil price, MarketLine’s latest industry assessment released last week, suggests the global oil & gas market shrank by 13.6% in 2016 as low crude oil prices pushed down revenues. Overall, the global oil & gas market saw its value fall from $1,395.7 billion in 2015 to $1,205.6 billion in 2016.

The research outfit’s latest forecasts predict a market value of $1,624.7 billion over the period 2016 – 2021; coming to a Compound Annual Growth Rate (CAGR) of 6.1%. Volume growth during the same period is forecast at 1.6% reaching a total consumption of 52,619.8 million barrels of oil equivalent.

The MarketLine report also highlights that the US oil & gas market is the largest domestic oil & gas market in the world, with a total value of $286 billion in 2016. This means that the US market alone accounts for almost 24% of the global oil & gas market.

Those shale players haven’t gone away. If higher prices benefit OPEC, US independents prosper too. Question here in Zurich and beyond is what happens when more barrels – both OPEC and non-OPEC – start hitting the market? Fondue for thought indeed, but that’s all from Switzerland folks! Keep reading, keep it ‘crude’!

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© Gaurav Sharma 2017. Photo: Zurich, Switzerland © Gaurav Sharma 2017.