EMs to drive oil demand in H2 2025: Peter McGuire
We have just got to get to that point again and work through this northern hemisphere summer. But I would expect Q4 to be cheaper than what Q3 is.
"But if you continue this sort of role forward, then I am pretty sure that you are going to see a re-engagement as far as consumption and, of course, for the likes of all forms of oil and all forms of energy from road building and all the way through to naturally motor vehicles and trucks and cars and boats and so on," says Peter McGuire, CEO, Australia, Trading.com.
We have barely seen any impact of the OPEC plus supply hike announcement that came in a couple of weeks ago. Oil market has not done much. It is currently trading near $69 per barrel mark. How do you see the demand-supply equation shaping up for the oil market and what is the outlook going forward?
Peter McGuire: Couple of things. First off, yes, oil prices are very much on a flatline. They have been very rangebound over the last couple of weeks and certainly month or so, so that tightness. There is no real breakout on either side. We are not down at under 65 and we are not above 70. So, it is really in that narrow band. Second part as far as growth, and growth is what the market is identifying in the second half, relatively strong growth from the likes of Brazil. Certainly, when you are looking at economic growth coming from the likes of China as well and India, so this is the first part of it, so that is going to be relatively good from a demand picture and the other side Euro zone and the USA really starting to pick up and be re-engaged post that Covid situation but very much the growth engine of the second half is going to be stronger than the first.
Just stretching a little bit into the demand point. Now despite that optimism that we have seen OPEC plus that has kept the 2025 and 2026 oil demand forecast unchanged. So, do you see this as a sign of caution?
Peter McGuire: To some extent caution, but the other side is the overall re-engagement. A lot of these economies are relatively okay, I mean, from a growth perspective and moving forward so you are going to see continued demand. There is no going to be any in the sense of any draw downs and you are going to see disruptions, unless you saw something dramatic happen from a geopolitical standpoint. Let us push that out of there.
But if you continue this sort of role forward, then I am pretty sure that you are going to see a re-engagement as far as consumption and, of course, for the likes of all forms of oil and all forms of energy from road building and all the way through to naturally motor vehicles and trucks and cars and boats and so on.
But there were also some reports which suggested that perhaps OPEC plus could pause the output hike after September. It is already planned till August and September, which means that total 2.2 million barrels of unwinding will be completed one year ahead of their schedule. Do you expect OPEC plus to then pause their output hike after September given how demand is shaping up?
Peter McGuire: Well, we have got to work through that. We have got to see how the market anticipates and experiences over the next two months. You have got the introduction of tariffs. We have got the understanding as far as price, what is happening on the inflation story that is globally, and the positioning as far as OPEC plus and compliance. So, we have got to get through the next 55 days or so, 50 days to take a better picture as far as OPEC and what they are expecting in Q4.
If they were to stay at that 548,000 as far as production, up from 411,000, then it is very much in their hands. So, you cannot rule out that they would not do it, but I cannot rule out that they will do it. So, we have just got to take it very much week by week to get to that point.
Now just as you were mentioning when we started the conversation that emerging markets are showing some sort of strength. So, with India, China, and Brazil with them outperforming, how much of the oil demand outlook that OPC plus has given do you think hinges on these three economies?
Peter McGuire: Well, very much so. I mean, you have only got to look at the likes they are powerhouse economies. India, China, you look at Brazil, they are big economies as far as population base and certainly consumption and they are growing consumption. They are really changing the footprint from infrastructure all the way through to usage and their dynamic economy and young I mean, if you look at India or Brazil, young populations, it is not so much in China. So, I am looking at more rapid take up as far as energy consumption over certainly for the rest of this year and then leading in for the rest of the decade. So, it is a very exciting market to be a part of and you cannot rule out growing consumption over the years ahead.
But if you can tell us what is the ballpark range where you are expecting oil to settle for the rest of this calendar year? Is it expected to be between that $65 to $70 per barrel for the rest of 2025?
Peter McGuire: It will be cheaper and it will be cheaper because of naturally the increase as far as production and what OPEC plus have identified from the production side of it. And I am expecting Q4 to be actually a glut in the market, so probably cheaper prices. We have just got to get to that point again and work through this northern hemisphere summer. But I would expect Q4 to be cheaper than what Q3 is.
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