HSBC flags downside risks to Brent price outlook due to OPEC+ supply hikes

(Reuters) - HSBC expects OPEC+ to accelerate supply hikes in August and September, which is likely to raise downside risks to the bank's $65 per barrel Brent forecast from the fourth quarter of 2025, it said in a research note on Friday.

The bank expects OPEC+ to implement two substantial production increases in August and September of 411,000 bpd and 274,000 bpd, respectively, compressing five increases into two months, it said.

"Our new scenario assumes regular hikes from October to December and leaves the 2.2mbd of voluntary cuts fully unwound by the end of 2025," it added.

The world’s largest group of oil producers, OPEC+, stuck to its guns last week with another big increase of 411,000 barrels per day (bpd) for July, as it looks to wrestle back market share and punish over-producers.

After years of curbing production by over 5 million barrels per day — about 5% of global demand — eight OPEC+ countries made a modest output increase in April before tripling it for May, June and now July.

According to HSBC's latest supply and demand model, the oil market is expected to show surpluses of 0.3 million barrels per day (mbpd) and 0.9 mbpd for 2026, up from previous forecasts of 0.2 mbpd and 0.7 mbpd, driven by higher OPEC+ output.

HSBC notes that the oil market appears balanced in the second and third quarters, as oil demand rises in summer and peaks in July and August, matching supply increases from OPEC+.

However, the bank expects accelerated OPEC+ hikes would tip the market into a bigger surplus in the fourth quarter of 2025 than previously forecast.

"Deteriorating fundamentals after summer raise downside risks to oil prices and our $65/b assumption from 4Q onwards," the bank said.

Earlier this week, Goldman Sachs said that it anticipates OPEC+ will implement a final 0.41 million barrels per day production increase in August.

Brent crude futures were trading at $65.17 a barrel by 1006 GMT, while U.S. West Texas Intermediate crude was at $63.15 barrel.

(Reporting by Anushree Mukherjee and Brijesh Patel in Bengaluru;Editing by Elaine Hardcastle)