Despite the current turmoil in the Middle East with sounds of gunfire and local energy facilities in turmoil, many oil market professionals seem to hold a pessimistic view on next year's crude oil market outlook.

This pessimistic sentiment stems from a belief that in 2025, the oil supply will further exceed global demand, with supply growth outside the OPEC alliance playing a major role in this.

In the latest monthly report released this month, the three major oil institutions — IEA (International Energy Agency), EIA (US Energy Information Administration), and OPEC (Organization of the Petroleum Exporting Countries) — have all reduced their estimates for next year's oil demand, thus reinforcing this view.

Looking specifically at the forecasts, since the IEA first released its outlook for the oil market in 2025 in April, the institution has consistently predicted that supply growth in non-OPEC countries next year will outpace global demand growth. Similarly, the EIA has held a similar view for seven out of the past eight months.

Much of the supply growth is expected to come from the four dominant oil-producing countries outside OPEC in recent years — the USA, Brazil, Guyana, and Canada. Additionally, Norway's supply is also expected to increase.

OPEC+ is also planning to increase production next year, possibly utilizing its currently idle spare buffer capacity of over 5 million barrels per day, yet this additional supply is not yet factored in.

On the demand side, all three institutions have lowered their growth forecasts for 2024 this month. Since January, their forecasts for this year's demand growth have been reduced by 0.3-0.4 million barrels per day.

Since April of this year (the first month when all three institutions began to release the 2025 outlook), their forecasts for next year's incremental crude oil demand have also been reduced by varying amounts ranging from 0.06 to 0.2 million barrels per day.

Of course, as the "buyers" and "sellers" in the crude oil market, as of the October reports, the difference in next year's crude oil demand estimates between the IEA and OPEC is still significant - the gap between the two estimates has reached about 2 million barrels per day.

Undoubtedly, the most startling bold prediction in the latest reports from the three major oil institutions is IEA's forecast that under global positive energy transformation, oil prices will fall to $25 in 2050.

In its latest report released this week, the IEA stated that as clean technologies continue to develop to meet the growing demand for electrical utilities, the world energy is moving towards a cheaper route, while oil & gas is expected to face an oversupply situation. In its main scenario, the IEA, advocating green technologies, forecasts that clean energy will meet almost all energy demand growth between 2023 and 2035, leading to a peak in fossil fuel demand before 2030.

This means that by 2030, the import price of crude oil will reach around $79 per barrel, higher than the current trading price. However, if the world achieves the net zero emissions target by the mid-century in a way that limits global warming, the IEA predicts that oil prices will drop to $25 per barrel by 2050...

Editor/Rocky