The Bullish Case for Oil in 2025

Once again we find ourselves knocking on the door for $70/bbl oil. 

Well, so much for the hopes of tearing crude prices down; I told you before that $50 oil was a myth. Even the most pessimistic of the bunch — the IEA — was forced to reconcile their bearish demand forecasts recently, and now expects global oil consumption to rise by more than a million barrels per day this year. 

For the record, that would represent a nearly 20% jump over 2024’s demand growth of roughly 830,000 bbls/d. It also means that those IEA analysts expect global demand to reach 103.9 million barrels per day this year. 

Normally, that wouldn’t be much of a problem… right? 

After all, there’s no shortage of hype over supply growth this year. From OPEC+ unwinding its output cuts to a potential ceasefire between Ukraine and Russia, and even the possibility of more policies from President Trump to keep Venezuelan oil exports flowing our way (spoiler: he won’t, and you’ll see why soon), it’s not hard to make a case that global supply will keep up with demand. 

However, there may be a little more wishful thinking going on than most people realize, and that is a treacherous recipe for higher prices come summer. 

The Bullish Case for Oil in 2025

There’s nothing more dangerous to accurately charting oil’s path in 2025 than overestimating the supply-side of the equation; my readers know this fact just as well as I do. 

And this year, there’s no shortage of optimism for over supply. The question you need to be asking is whether these projections aren’t a little too rose-colored. You see, despite the slow unwinding of OPEC+ cuts, most of the world’s output growth is expected to come from the Americas — approximately 1.5 million barrels per day, specifically from the United States, Canada, Brazil, and Guyana. 

From that list, I only see two that will experience any significant boost in supply. 

The no-brainer is Guyana. Exxon and friends have been eager to develop the country’s massive offshore oil resources, and the Yellowtail project is expected to help push output to over 900,000 barrels per day in 2025, or roughly 300,000 barrels per day higher than last year. 

In Canada, the largest oil sands operators are pumping more investment dollars to increase output, and the start-up of the Trans Mountain Pipeline expansion in May of 2024 has opened up the bituminous sands in Alberta to a whole new market — Asia. 

It’s also become pretty clear to President Trump just how valuable those heavy Canadian crude imports are to our refiners along the Gulf Coast. That heavy crude becomes even more important if he follows through with his latest threat yesterday to place a 25% tariff on ANY country that buys oil from Venezuela. 

Of course, Brazil is pinning any hopes of growing oil output on getting its first oil from the Bacalhau field. The problem is that at current projections, the country’s oil production is only expected to rise to 3.6 million barrels per day by the end of 2025, which would put its growth at just under 300,000 barrels per day this year — still far below its peak of nearly 4.7 million barrels per day in 2023. 

Between these three top producers in the OECD, the world is expecting to see production growth of about 900,000 barrels per day (and these are optimistic figures, too). 

So, to meet those growth expectations of 1.5 million barrels per day, U.S. drillers are going to have to really turn on the taps — and that’s a problem that could blindside everyone. 

In December, the EIA pegged U.S. crude oil field production at almost 13.5 million barrels per day. If you’re expecting to see another growth of a million barrels per day like we did in 2023, I’ve got some bad news for you. 

Keep in mind that people are expecting this growth to occur when prices are struggling to breach the $70/bbl mark — let alone shrug off threats from the Trump administration that prices are heading to $50/bbl. 

In other words, the fundamentals are far tighter than most believe (or care to accept). Here’s a little glimpse at how tight the EIA sees the global liquid fuels market over the next two years:

Of course, we can also throw in the fact that global stockpiles of crude oil continue falling, and well below the 5-year average. 

Now imagine what would happen if OPEC+ decides to really turn the screws and delays putting more crude back on the market.

That’s a bullish case for oil we can’t ignore. 

Fortunately, the higher crude prices coming this summer will give a boost to a very specific group of oil stocks — those with the technology to drill more for less. 

Let me show you exactly what I mean.