Morgan Stanley has raised its Brent Crude price forecast for the second half of 2025 to an average of $70 per barrel, up from a previous range of $66-$68 per barrel. This adjustment follows OPEC+’s decision to delay the start of its planned production increase and to slow the pace of output hikes into 2026.
On Thursday, the OPEC+ group announced it would delay the easing of its 2.2 million barrels per day (bpd) production cuts until April 2025, pushing back the initial plan to start in January. Additionally, OPEC+ extended the timeline for fully unwinding these cuts until September 2026.
The delay and slower pace of production increases will likely result in a smaller market surplus than initially expected, according to Morgan Stanley analysts. The bank pointed out that, excluding the three OPEC members exempt from the cuts (Iran, Libya, and Venezuela), the remaining nine OPEC countries will produce 400,000 bpd less in 2025. The forecast for combined output from these nine members was also lowered by 700,000 bpd by the fourth quarter of 2025.
“As a result, we have reduced our 2025 surplus estimate from 1.3 million bpd to 0.8 million bpd in our total liquids balance, and from 0.7 million bpd to 0.3 million bpd in our crude-only balance,” Morgan Stanley said.
Despite these changes, oil prices remained largely unchanged on Friday, with early indications showing a weekly loss. The three-month delay in easing production cuts was widely anticipated by the market. However, the slower pace of output increases and the extended timeline suggest that OPEC+ recognizes that global demand is not strong enough to absorb the full reversal of the production cuts throughout 2025.
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