By Avi Salzman

Oil prices could fall below $50 this year as a flood of new supply from OPEC and its allies comes onto the market in the coming months, according to a new projection by S&P Global Commodity Insights released on Monday.

The projection comes after oil had its best week of the year, with West Texas Intermediate crude prices rising 6.2% to $64.58 per barrel. Brent crude, the global benchmark, also had its best week of the year, rising 5.9% to $66.47. Prices have been on a positive run lately, in part because fuel demand has stayed relatively strong.

Don't expect the momentum to last, however, said Jim Burkhard, global head of crude oil research at S&P Global Commodity Insights. OPEC+, a coalition that includes OPEC allies like Russia, is adding more production to the market -- just as demand starts to flatten out.

Global oil production is expected to rise 2.2 million barrels per day for the second-half of 2025, compared to just 390,000 barrels of oil demand growth, according to Burkhard. In fact, demand growth in 2025 could hit its lowest level since 2001, excluding the pandemic and financial crisis.

"The oil price is currently defenseless," Burkhard said in a news release. Summer driving season may keep prices propped up for a while, he said, but added that "eventually there will be too much crude oil in the market absent a change in production trends."

Burkhard lowered his expectations for the average Brent crude price to $63 from $72 in April. Prices could briefly drop into the $40s, the firm said. West Texas Intermediate crude, which tends to trade below Brent, could also trade in the $40s.

Low oil prices will cause U.S. drillers to slow down and start pulling rigs out of the market, Burkhard said. By the end of 2026, U.S. oil production could be down 640,000 barrels per day from what it was in mid-2025, according to S&P Global Commodity Insights. It would be the first decline in about a decade.

Write to Avi Salzman at avi.salzman@barrons.com

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June 09, 2025 06:05 ET (10:05 GMT)

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