The global oil market has been riding through intense swings, with Brent crude tumbling 6.85% just last week after Saudi Arabia signaled it’s prepared to handle a stretch of lower prices. This isn’t happening in isolation. OPEC+, spearheaded by Saudi Arabia and Russia, has committed to ramping up production for a second month in a row, adding another 411,000 barrels per day (bpd) in June. Altogether, by the end of the April–June window, nearly a million bpd will have returned to the market.
Yet, while OPEC+ grabs headlines, it’s important to remember that non-OPEC producers now provide nearly 60% of global oil — suggesting their share may have plateaued if extra barrels push prices further down. For Saudi Arabia, the strategy is twofold: it puts pressure on OPEC+ members like Iraq and Kazakhstan, which have regularly overproduced, and it tests the resilience of U.S. shale producers.
Estimations have been quick to react. Barclays, for instance, cut its Brent forecast for 2025 by $4, landing at $66 per barrel, while ING now expects an average of $65 this year, down from $70. These downward revisions reflect not just the rising supply but also faltering demand: Trump’s tariffs on China, global recession worries, and softening imports of refined fuels have all weighed heavily on prices. Should Brent dip below $50, major offshore investment decisions may be put on hold.
Saudi Arabia’s shift is driven by both domestic priorities and geopolitical calculations. Under Energy Minister Prince Abdulaziz bin Salman, Riyadh has moved away from its traditional price defense playbook, aligning more closely with President Trump, who visits the Middle East this month and has been vocal about wanting lower fuel costs. This comes as Trump’s tariffs put pressure on Chinese oil demand, which was already cooling due to rising LNG use and the spread of electric vehicles across China and Europe.
In the meantime, OPEC+ unity is fraying. Kazakhstan, in particular, has been openly breaching its quota, expanding output with the help of foreign partners like Chevron and Eni. Kazakh leaders have signaled they will prioritize national interests over OPEC+ commitments, and other member states are starting to question why they should shoulder production cuts while others profit.
Meanwhile, geopolitical risks continue to muddy the waters. The U.S. is in direct nuclear talks with Iran, but Trump has threatened secondary sanctions on countries importing Iranian crude, which could tighten supply if enforced. Russian oil, too, remains under sanctions, though Trump’s improving rapport with Putin could reshape that dynamic.
Outside of these power centers, instability in the Red Sea persists, despite U.S. strikes against Houthi forces, and the Gaza conflict adds another layer of volatility.
For shipping markets, OPEC+’s decision to boost supply has improved sentiment, raising hopes for stronger spot freight rates through the summer. But sentiment alone isn’t enough — a lasting rate recovery hinges on both tangible supply increases and supportive trading conditions. In short, while oil prices face downward pressure, shipping markets may be on the cusp of a rebound. If OPEC+ deliveries go ahead as planned and geopolitical tensions escalate in ways that disrupt sanctioned flows or reroute cargoes, the tanker market could stand to gain. For now, market players must carefully navigate this mix of supply shifts, demand uncertainties, and geopolitical hotspots — but for those positioned wisely, there may be significant upside ahead.
Data Source: Intermodal