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Super-Spiked Videopods (EP77): The Misunderstood Unwind of OPEC Quota Cuts
WATCH the video on Substack by clicking the play button above or on YouTube (here).
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As all of you that have been watching our video podcasts or reading our posts over the years by now surely know, our focus at Super-Spiked and at Veriten has been on the long-term outlook for the energy sector, not the shorter-term oil price guessing game. But in recent weeks, we have not been able to resist weighing in on what we think is an excessively bearish consensus view of oil prices—the perceived massive oil glut—that has been weighing heavily on energy equity sentiment since the early April so-called "Liberation Day" tariff announcements that coincided with OPEC+ accelerating the unwind of a series of voluntary production cuts. That double whammy has driven an overwhelming consensus sentiment to be bearish oil demand while also assuming a surge in both non-OPEC and OPEC crude supply would drive oil prices to $50 or lower in 2025.
But we are now 5.5 months past that early April bearish shift, and crude oil prices, at least so far, are proving far more resilient than expected even as OPEC+ has made incremental moves to unwind production cuts. Last week in a written post (here), we linked the excessive bearish near-term sentiment to a similar overhang that exists on the long-term oil view, where there is still a lingering let's call it a "net zero world" overhang that crude oil demand will peak in coming years or at best have minimal growth. We have observed that using OPEC Research analyses, rather than the IEA as a baseline, shows far less cyclical or structural crude oil oversupply. Yes, there is a still some softness that might be expected for coming months, but nothing like the "oil glut" that everyone fears.
This week we follow up on last week's written post on this topic to set the record straight on a couple of items, address pushbacks to our pushback to anti-oil and gas macro biases in short-term analyses, and raise some new points on the near- and long-term oil macro outlook. There are 4 major areas we will discuss: (1) how we are thinking about OPEC+'s quota unwind; (2) China oil demand; (3) the role of US shale going forward; and (4) is there any chance the oil glut bears could still be proven correct.
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Published on 11 hours ago