Morgan Stanley, HSBC slash crude oil supply forecast; Brent average pegged near $70 for 2025 after OPEC+ verdict

Morgan Stanley and HSBC revised down their expectations for an oil market surplus next year and forecast a Brent price of $70 per barrel, following a decision by OPEC to delay and slow plans for higher output.

On Thursday, OPEC , which groups the Organization of the Petroleum Exporting Countries and allies including Russia, postponed the start of oil output increases by three months until April.

It also said the cuts would take place until September 2026, nine months later than previously planned.

Morgan Stanley raised its Brent forecast for the second half of 2025 to $70 from $66-68 per barrel, the bank said in a note on Thursday.

The bank lowered its estimate for OPEC-9 (OPEC members minus Iran, Libya and Venezuela who are exempted from output curbs) production by 400,000 barrels per day (bpd) for 2025, and by 700,000 bpd by the fourth quarter of next year.

It also cut its estimate for Iran’s production by about 100,000 bpd through 2025.

“In aggregate, this reduces our estimated surplus in 2025 from 1.3 to 0.8 million bpd in our total liquids balance, and from 0.7 to 0.3 million bpd in our crude-only balance.”

HSBC maintained its Brent crude price forecast at $70 per barrel for 2025 and beyond, it said in a note on Friday.

It anticipates an oil market surplus of 0.2 million barrels per day in 2025 if OPEC proceeds with planned production hikes in April. Previously, it expected a surplus of 0.5 million bpd.

Bank of America expects Brent oil prices to average $65 per barrel, assuming no significant increase in OPEC production volumes in 2025.

“Demand growth has slowed this year and is expected to remain tepid in 2025 too, tipping the market into surplus next year,” it said.

The weak demand outlook is the Achilles’ heel for OPEC , the bank said, and forecast global oil demand growth averaging 1 million bpd this year and 1.1 million bpd next.

Oil slid to the lowest in more than two weeks on concerns that OPEC ’s decision to push back the revival of halted production won’t prevent a surplus forming next year.

Brent crude declined as much as 1.2% to $71.21 a barrel, the lowest intraday level since Nov. 18. OPEC and its allies delayed increasing supplies for a third time, opting to start with a modest increase in April, and then unwind the cuts over 18 months, a slower pace than previously planned.

The deferral was aimed at offsetting a seasonal demand lull early next year, Saudi Arabian Energy Minister Prince Abdulaziz bin Salman told CNBC on Thursday. The first three months are “known to be a quarter for building stocks,” he said.

Several analysts said the move will pare global oil output next year and tighten balances somewhat, with Morgan Stanley raising price forecasts modestly. Yet they generally continue to expect a surplus in 2025 as Chinese demand growth cools and new supply from the Americas swells.

Crude has been confined to a tight range since mid-October, with bullishness from geopolitical developments in the Middle East and Ukraine countered by expectations for a glut in 2025. Weak global market balances mean there is little scope for the cartel to restore the output it’s been withholding since 2022.

“We doubt that the environment will look more favorable next year for the petro-nations to bring back their oil to the market,” said Norbert Ruecker, head of economics at Julius Baer & Co. Ltd. “Supply growth from the Americas should more than compensate soft global demand growth. China’s consumption is peaking.”

OPEC ’s decision to delay the revival of its oil production was aimed at offsetting a seasonal demand lull early next year, Saudi Arabia’s energy minister said.

“The first quarter is not a good quarter to bring volumes,” Prince Abdulaziz bin Salman told CNBC in an interview. “That quarter is known to be a quarter for building stocks.”

OPEC agreed on Thursday to postpone a series of modest output increases from January to April, and slow the pace of those hikes when they eventually begin. Global oil demand typically begins to ease in the first quarter once winter fuel consumption tails off.

For several months, the group has been seeking to restore output halted over the past two years, but been frustrated as faltering demand in China and swelling supplies from the Americas pressure crude prices. Many analysts predict that global oil markets will still face a surplus in 2025 even if OPEC doesn’t raise output.

Despite deciding to postpone, Prince Abdulaziz said that the alliance “honestly believe the market next year will be better than what is being projected.”

Oil traders have shown a lukewarm reception to Thursday’s decision, with futures declining in London to a two-week low below $72 a barrel.

Bitcoin, which hit the $100,000 mark for the first time on Thursday as investors bet on a friendly U.S. regulatory shift, ran into profit-taking. It tumbled as far as $92,092 and was last down 0.15% on the day at $98,871.

“This spike in volatility over the last 24 hours has the hallmarks of a classic blow-off top,” said Tony Sycamore, analyst at IG.

Oil prices fell as the decision from OPEC to delay a planned hike in output to April highlighted concerns about weak demand. U.S. crude fell 1.42% to $67.34 a barrel and Brent dropped to $71.14 per barrel, down 1.32% on the day. [O/R]

Gold prices inched lower on Friday, down 0.1% to $2,629 per ounce, headed for a second straight week of declines.