EMA Journal • Fall 2025 • Energy Markets Insights

Entering the fourth quarter (Q4) of 2025, oversupply concerns are mounting as OPEC+ lifts its output ahead of schedule. The U.S. Energy Information Administration’s (EIA) latest Short-Term Energy Outlook (STEO) projects that U.S. West Texas Intermediate (WTI) crude prices will decline by year’s end. EIA projects WTI averaging ~$66/bbl in Q3, easing to ~$62/bbl in Q4. If supply growth outpaces demand into early 2026, prices could test the mid-$50s. Even with the potential of a slowing U.S. shale patch, there are other potential sources of supply.

The primary driver behind the expected downturn is OPEC+ policy. The coalition is unwinding production cuts a year early, boosting supply from September 2025 onward. Analysts lifted global supply forecasts by nearly 1 Mb/d for the fall. For the first time in years, OPEC+ will lead output growth, surpassing U.S. shale. U.S. production growth is expected to increase year-over-year by around 180 kb/d, which is much smaller than the increase seen from 2022 to 2023 of nearly 1 Mb/d. Even with the slowing of U.S. production, OPEC+ and offshore supplies in Brazil and Guyana will keep the market well-supplied.

Global demand remains healthy but is not keeping pace with the growth in supply. China and India have trimmed imports recently, with Chinese firm Sinopec forecasting lower demand expected for the rest of 2025. The U.S., which has been the primary driver of global supply in years past, remains critical. Output is set to hit a record 13.6 Mb/d by December, averaging 13.4 Mb/d in 2025. The EIA projects a global surplus by more than 2 Mb/d in Q4 2025, much higher than earlier estimates. Floating storage has already increased, and high-frequency inventories in Singapore, Amsterdam-Rotterdam-Antwerp, and the U.S. are all pointing to surpluses. This surplus is a central factor pushing prices lower.

OPEC Gulf states and Brazil are filling market gaps as Russian flows shrink, giving U.S. refiners diverse sourcing options. Sanctions and tariffs both remain wildcards. Buyers of Russian oil face tariff threats, spurring some to diversify supply. However, both India and China have returned to the fray and appear to be purchasing Russian barrels regardless. Nevertheless, geopolitical risks persist. Despite bearish fundamentals, energy markets remain prone to shocks and any escalations in the Middle East could once again ignite a price shock.

• Diesel supplies remain tight. U.S. distillate inventories are forecast to end 2025 at their lowest since 2000. Diesel prices will be most reactive to headlines and are the most prone to price shocks.

The late-2025 oil market will be defined by ample supply and a sideways trending market. OPEC+ output growth, record U.S. production and expanding exports from Brazil and the Gulf point to a clear surplus. StoneX is forecasting WTI in the low-$60s by year-end, but there are risks on the horizon: diesel scarcity and geopolitical shocks. For now, distributors can expect cheaper, more reliable fuel supply — but should remain watchful for any sudden change in the global balance.

by Alex Hodes, Director Market Strategy – Energy – StoneX Financial Inc. FCM Division

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