Investing.com — Wells Fargo analysts predict a shift in global oil market dynamics by mid-2025, predicting improved fundamentals and stronger prices after a period of oversupply.
They estimate a surplus of 1 million barrels per day (mmbpd) in the first half of 2025, despite production cuts by OPEC+.
“Downside price risks outweigh upside risks 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 of $80 for and $75 for WTI, supported by slowing US shale production and Saudi Arabia’s preference for prices above $70 per barrel.
Although US shale production growth this year is minimal at 0.3 mmbpd, Wells Fargo (NYSE:) says structural changes in the industry, including consolidation and a focus on returns, have curbed excessive production growth.
OPEC+ is expected to prioritize price stability through disciplined production management.
“We expect OPEC+ to support oil prices and limit production in the near future. We base this view on the most recent actions of delaying production increases,” Wells Fargo said.
However, they note that uncertainties remain, including global demand trends, trade tensions and potential geopolitical conflicts.
The analysts also highlighted the possibility of significant consequences from US policies under a second Trump administration, particularly regarding sanctions on Iran, which could limit Iranian oil exports by as much as 1.4 million barrels per day.
Wells Fargo’s outlook reflects confidence in a gradual market recovery, with oversupply giving way to a better supply-demand balance and higher oil prices in the second half of 2025.
