OPEC expects slower 2025 oil supply growth from rivals after price drop

By Alex Lawler

LONDON (Reuters) -OPEC on Wednesday trimmed its forecast for growth in oil supply from the United States and other producers outside the wider OPEC+ group this year and said it expected lower capital spending following a decline in oil prices.

Supply from countries outside the Declaration of Cooperation - the formal name for OPEC+ - will rise by about 800,000 barrels per day in 2025, OPEC said in a monthly report, down from last month's forecast of 900,000 bpd.

A slowdown in supply growth outside OPEC+, which groups the Organization of the Petroleum Exporting Countries plus Russia and other allies, would make it easier for OPEC+ to balance the market. Rapid growth from U.S. shale and from other countries has weighed on prices in recent years.

In recent weeks, oil prices have come under pressure from OPEC+'s decisions to increase output in May and June more rapidly than first planned, and from U.S. President Donald Trump's tariffs.

Oil prices maintained an earlier decline after Wednesday's report, with global benchmark Brent crude trading just below $66 a barrel. On May 5 Brent settled close to $60, its lowest settlement since 2021.

In the report, OPEC said it expected investment in exploration and production outside OPEC+ in 2025 to decline by about 5% year-on-year. In 2024, investment rose by about $3 billion year-on-year to reach $299 billion, OPEC said.

"The potential impact on production levels in 2025 and 2026 of the decline in upstream E&P oil investments will constitute a challenge, despite the industry's continued focus on efficiency and productivity improvements," the report said.

While the United States is still expected to drive supply growth, OPEC expects total oil output to rise by about 300,000 bpd this year. Last month, it forecast growth of 400,000 bpd.

OPEC left its forecasts for global oil demand growth unchanged in 2025 and 2026, after reductions last month citing the impact of first-quarter demand data and trade tariffs.

This week's trade agreement by the United States and China was a step towards reducing disruption, it said.

"The 90-day trade agreement between the U.S. and China suggests the potential for more lasting agreements, likely supporting a normalisation of trade flows but at potentially elevated tariff levels compared to pre-April escalations," OPEC said.

KAZAKHSTAN'S OUTPUT FALLS

OPEC's report also found crude production by the wider OPEC+ fell in April by 106,000 bpd to 40.92 million bpd due in part to a reduction in Kazakhstan, which is under pressure to boost compliance with OPEC+ quotas.

The 41,000 bpd drop in Kazakhstan, which has persistently exceeded its OPEC+ target, was the largest in OPEC+, although the country remains far above its OPEC+ quota.

Other nations including Iran, Libya and Nigeria reduced output, the report showed.

OPEC+ was scheduled to raise output in April, and in May and June by more than originally planned, as part of a plan to unwind its most recent layer of output cuts, which were put in place to support the market.

(Reporting by Alex Lawler; Editing by Barbara Lewis)