Global Commodities: Are oil prices $10 too low or $20 too high?

At Any Rate

Global oil inventories are visibly increasing, yet prices have remained surprisingly stable, with market opinion divided on whether current oil prices are too low or too high. We anticipate prices to stay within current ranges before easing into the high $50s by year-end. The global oil surplus has widened to 2.2 mbd, likely necessitating a price adjustment to prompt a supply-side response and restore balance. Yet, despite supply pressures, three strong market forces are providing a firm floor in the $55-60 Brent ($50-55 WTI) range. Following the July hike, most OPEC members, excluding Saudi Arabia, appear to be producing at or near maximum capacity. The US administration may begin repurchasing oil for the SPR as early as August. Meanwhile, US shale wellhead breakeven prices, assuming zero return, are estimated at around $47 WTI.

Speaker

Natasha Kaneva, Head of Global Commodities Research

This podcast was recorded on 30 May 2025.

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