The global oil market is navigating a complex landscape as US sanctions on Russian oil threaten to reduce supply by 1.5 million barrels per day. However, this potential shortfall is being counterbalanced by increased production from OPEC+, which plans to release an additional 1.23 million barrels per day this year. The cartel's substantial spare capacity of 5.8 million barrels per day, as calculated by the IEA, provides further assurance against supply disruptions. Additionally, non-OPEC production is expected to rise by 1.7 million barrels per day in 2025, according to BNEF forecasts, helping to stabilize market prices.
Despite these supply-side adjustments, the demand outlook remains uncertain. While colder temperatures have spurred some increase in global oil demand, the strength of the US dollar continues to exert downward pressure by making crude more expensive in other currencies. Furthermore, potential deflationary trends in China, the world's second-largest economy, could dampen its oil consumption growth, adding to bearish market sentiments. The market's improved understanding of the implications of US sanctions, compared to the 2022 crisis, suggests that price volatility may remain subdued despite these challenges.
As of 16:46 on January 16, the price of crude oil (CL1) stands at $78.66, down from its last close of $80.04. This reflects the market's balancing act between supply growth and demand uncertainties, keeping prices within a stable range.