September 15, 2025 – London, UK

Oil prices have been volatile in recent weeks, sliding amid concerns over global oversupply and softening U.S. demand, even as geopolitical tensions add upward pressure. Brent crude futures settled lower last week, reflecting broader market anxieties about economic slowdowns and increased production from key players. This comes as the industry navigates a complex landscape of energy security challenges and shifting export dynamics.

OPEC+ Navigates Production Increases

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, have signaled caution in unwinding production cuts, opting for modest output hikes to reclaim market share. In early September, the group decided to add 548,000 barrels per day from August onward, surpassing some expectations but still measured against predictions of oversupply. This move reverses some of the cuts originally set to remain until the end of 2026.

OPEC’s World Oil Outlook 2025 projects significant growth in global electricity generation, rising from 31,345 terawatt hours in recent years, underscoring the ongoing demand for energy despite transitions to renewables. However, analysts at HSBC anticipate a substantial oil surplus of 1.7 million barrels per day starting in the fourth quarter of 2025, posing downside risks to 2026 Brent crude price forecasts. A key OPEC+ meeting on September 7 discussed further unwinding of cuts, highlighting the alliance’s efforts to balance supply amid looming oversupply.

U.S. Crude Production and LNG Exports Drive Market Dynamics

In the United States, crude oil production is expected to decline by about 1% in 2026 compared to 2025 levels, while natural gas production remains relatively flat. Despite this, U.S. LNG exports are set to expand significantly, with baseload export capacity projected to increase by 53% (or 6.0 billion cubic feet per day) by the end of 2026 as new facilities come online. This growth is fueled by increasing demand, particularly in Asia, where LNG imports are forecasted to rise through 2030 due to economic expansion and coal-to-gas switching.

The U.S. Energy Information Administration’s Short-Term Energy Outlook for September 2025 forecasts Brent crude prices declining from $68 per barrel in August to around $50 per barrel in early 2026, driven by large inventory builds from OPEC+ production increases. Meanwhile, U.S. natural gas consumption is expected to rise by 1% in 2025, reaching a record 91.4 billion cubic feet per day, with production climbing about 3% from 2024 highs. Eastern U.S. natural gas from the Appalachian Basin is increasingly meeting Gulf Coast demand, driven by LNG exports.

North America’s LNG export capacity is on track to more than double by 2028, with projects like LNG Canada planning to start exports in summer 2025. The rescinding of the LNG export permitting pause in January 2025 has supported continued U.S. hydrocarbon production growth through exports. However, global LNG demand is projected to peak in 2025 and decline through 2030, particularly in emerging Asian markets facing economic and logistical challenges.

Petrochemical Sector Faces Reforms and Challenges

In South Korea, a near-default by a major player has prompted urgent calls for petrochemical industry reforms, heightening concerns over corporate debt in the sector. This incident underscores the vulnerabilities in the global petrochemical market amid fluctuating oil prices and supply chains.

Globally, the industry is seeing layoffs in oil and gas companies during 2024 and 2025, reflecting cost-cutting measures in response to market pressures. In Norway, the Green Party is pushing for a gradual phase-out of the oil sector as part of election strategies, highlighting the tension between traditional energy and sustainability goals.

Regional Developments in the Middle East and Africa

Egypt’s oil and gas production has climbed after a four-year slump, entering a growth phase since August 2025, with natural gas output showing particular gains. The country has signed three new oil and gas agreements worth over $121 million with international firms, boosting its energy sector.

In the Middle East and North Africa (MENA) region, energy markets are softening, but investments are growing, with renewables and nuclear power gaining prominence in power generation mixes. U.S. LNG deliveries to the Middle East surged over 300% in 2024, with further increases expected in 2025. Russia’s energy ties with China have strengthened since the Ukraine war, including developments like the Power of Siberia 2 pipeline.