Bank of America analysts warn that oil markets are entering a new “slow grind” price war after OPEC+ agreed to add roughly 411,000 barrels per day (b/d) in June—an effective net increase of about 170,000 b/d once overproduction and member constraints are factored in.
OPEC+ Production Hike and Market Oversupply
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Net Addition: 170,000 b/d of incremental supply in June
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Current Price Forecast: Brent averaging $62 per barrel in 2025 (down from $80 in 2024)
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Bearish Scenario: Potential drop to $50 per barrel if trade and price wars collide
Analysts note that even a modest supply boost into an already well‑supplied market is enough to keep prices under pressure.
Drivers Behind Saudi Arabia’s Strategy
Saudi Arabia’s decision to boost output reflects multiple long‑term goals:
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Recover Market Share: Regain ground lost to U.S. shale and other OPEC+ members
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Leverage High Spare Capacity: Maximize production from underused facilities
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Support Renewables Transition: Lower hydrocarbon prices ease inflationary impacts, offsetting roughly half of U.S. tariff effects
Comparing Past Oil Price Wars
BofA contrasts today’s “slow grind” with previous episodes:
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1998 Asian Financial Crisis: Rapid collapse to ~$10/bbl after demand shock
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2014–2016 Shale Offense: Flooding the market to undercut U.S. producers
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2020 “Fast and Furious”: Price collapse amid COVID‑19 demand plunge
Unlike those abrupt episodes, the current strategy is drawn out, risking longer‑term margin erosion.
Price Outlook and Risks
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2026 Forecast: BofA’s baseline calls for $70 per barrel Brent, but warns this is at risk if the price war endures
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Inflation Relief: Cheaper oil may partly counteract tariff‑driven inflation in major economies
For real‑time tracking of crude benchmarks and other commodities, investors can consult the Commodities API to monitor live price movements and supply data.
