HSBC Lowers Brent Price Forecast Amid Reports of OPEC+ Barrels Returning Early

OPEC+’s reported decision to increase oil production starting December 1 could lead to an earlier-than-expected rise in supply, potentially putting downward pressure on crude prices, according to analysts at HSBC.

In their client report, HSBC analysts noted that if the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, confirm this plan, it would signify the conclusion of a prolonged supply-tightening phase that has seen the group restrict approximately 3.4 million barrels per day since October 2022.

The analysts stated, “The earlier return of OPEC+ barrels is incrementally bearish,” and forecast that the oil market could be in a surplus of around 600,000 barrels next year. They also indicated that the market is likely to be oversupplied in the medium term, as OPEC+ lacks the capacity to reverse remaining production cuts.

Consequently, HSBC revised its price forecasts for 2025 and beyond, lowering the expected price from $76.5 per barrel to $70 per barrel.

On Tuesday, oil prices experienced a significant decline as concerns about weak demand growth overshadowed fears that escalating tensions in the Middle East could disrupt global supply. As of 06:10 ET, the Brent crude contract fell by 1% to $71.02 per barrel, while West Texas Intermediate (WTI) futures dropped 1.2% to $67.36 per barrel.

The situation in the Middle East remains tense, as Israel announced that its military had begun “limited” operations against Hezbollah targets near the Lebanese border, raising the risk of an expanded conflict in a region critical to oil supply.

Despite these geopolitical concerns, a sharp decrease in Chinese manufacturing activity reported in September pointed to a potential slowdown in future demand from the world’s largest crude importer.

Additionally, the American Petroleum Institute is expected to release its weekly assessment of U.S. crude oil and fuel inventories for the week ending September 27.