(MENAFN- The Arabian Post)

Oil markets face mounting pressure to weaken as forecasts from Macquarie warn of a shift into the $50-per-barrel range amid“punishing oversupply.” Macquarie's analysts trimmed their price outlooks and argue supply growth from both OPEC+ and non-OPEC producers threatens to swamp demand.

The bank now expects West Texas Intermediate to average about $64 per barrel in 2025, down by $3 from previous estimates, and to drop further to $57 in 2026. Their revised view underscores what they describe as a market more bearishly balanced than ever.

Compounding Macquarie's view, the International Energy Agency has flagged a looming overhang in global crude inventories, attributing the surplus largely to Saudi output increases and weaker demand from Asia. Under its projection, supply could outpace demand by as much as 2.5 million barrels per day heading into 2026.

OPEC+ has signalled its intent to boost production further. The alliance already implemented a 137,000 bpd increase for October, and sources suggest November's gains could be more aggressive, with proposals of up to 411,000 bpd under discussion. OPEC+ nations are now seen as favouring market-share defence over sustaining price support.

Yet the group has also underdelivered against its own targets: since April, actual output gains have lagged by nearly half, as capacity constraints bite among producing states. Even so, the tendency is clear-more barrels queued onto a market nearing saturation.

Non-OPEC supply contributes to the strain. U. S. shale producers continue to ramp output, aided by improved drilling efficiency and technological gains, while Brazil, Guyana and other producers expand their capacity. At the same time, Iraqi Kurdistan has resumed export flows after a hiatus of more than two years, adding roughly 180,000–190,000 bpd to global supply.

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From the demand side, growth softness in key markets is pressing. China's oil stockpiling has propped up imports, but evidence of slowing economic momentum raises doubts about sustained uptake. Meanwhile, elevated interest rates, trade uncertainty and inflation stress are tempering consumption growth worldwide.

Macquarie frames the current environment as more bearish than the“cartoonishly oversupplied” market it had anticipated earlier. The strategists believe discipline among high-cost producers, particularly in U. S. shale, will eventually impose limits on further expansion-but only after prices slide further. They warn that absent a shift in policy or unexpected disruption, WTI could breach the $50 threshold.

Internal OPEC+ dynamics are strained. Gulf states like Saudi Arabia and the UAE appear ready to absorb near-term revenue pain in order to erode the viability of higher-cost rivals. Russia, grappling with fiscal pressures and sanctions, is less eager to sacrifice price. The result is a tension between volume and discipline.

Producers already show signs of reaction: Citigroup analysts estimate that a fall into the upper $50s would prompt a shutdown of up to 75 rigs in the U. S., curbing output by over 300,000 bpd. Some argue that beyond a psychological barrier, low prices will force capital cuts and production rationalisation.

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