Crude oil prices have largely held steady despite ongoing geopolitical tensions, with analysts noting that the sector’s fundamentals continue to underpin a favorable earnings outlook for energy companies.
In a Monday briefing, Barclays energy analyst Amarpreet Singh reaffirmed a positive view on the industry, pointing to persistent demand and supply bottlenecks in key producing countries.
Data from the first half of 2025 shows global oil inventories decreased, countering expectations of a surplus.
“In addition to the lack of inventory build-up in H1 25, evidence of supply constraints among OPEC+ members also bolsters our constructive view on oil prices,” Singh said.
OPEC+ had increased its output target by 1.4 million barrels per day by July, yet actual production rose only 0.5 million barrels per day, as some members struggled to meet quotas.
Geopolitical developments remain crucial. The Trump-Putin summit produced no tangible progress on Ukraine, raising the prospect of new sanctions on Russia. Meanwhile, Iran faces a late-August deadline to resume nuclear negotiations or face broader UN penalties. The U.S. has already expanded sanctions on Iranian oil exports, which Barclays expects could tighten supply further.
Outside OPEC+, U.S. production is broadly in line with expectations, though weekly data shows a slight decline since late 2024. Brazilian output, on the other hand, surprised to the upside in July, nearing 4 million barrels per day as additional pre-salt wells came online.
“Based on the expected development pipeline and our view of base declines, we think oil output growth from Brazil will likely decelerate sharply again next year,” Singh said.
Barclays’ price outlook remains above current market levels and consensus. Brent is projected at $74 per barrel for Q4 2025 and $70 for Q1 2026, while WTI is forecast at $71 and $67 for the same periods.
“Oil markets defied expectations of a large surplus in H1 25 and key OPEC+ producers have not been able to keep up with the increase in production targets,” Singh said.
The bank also continues to recommend long WTI calendar spreads, expecting tightening supply conditions to support further gains in prices.
This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.