Page 6 - Policy & Economic Report - June 2025

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

serves as the primary maritime passage for approximately 25% of the world’s oil supply—including exports
from Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, Iraq, and Iran—as well as the majority of the
world’s spare production capacity. Barring any major supply disruptions, the global oil market appears
well supplied in 2025. In May, global oil production increased by 1.9 million barrels per day (mb/d)
compared to the same period last year, driven in part by the easing of voluntary production cuts by OPEC+
members. For the full year 2025, global oil supply is projected to grow by 1.8 mb/d, reaching 104.9 mb/d,
with a further increase of 1.1 mb/d anticipated in 2026. Non-OPEC+ producers are expected to contribute
an average of 1.4 mb/d in additional supply this year and 840 kb/d in 2026.

Crude spot prices declined in May, primarily driven by continued selloffs in the futures market. Spot prices
also came under pressure, mainly due to weaker European refiners’ demand, given refinery outages,
easing geopolitical concerns about oil supply, and signs of a well-supplied crude market, including
expectations of higher short-term supply from the US. Crude oil futures prices extended their decline in
May, amid persistently elevated volatility and downward pressure from global macroeconomic headwinds
and the continued unwinding of geopolitical supply risk premiums. Weaker sentiment was further
exacerbated by trade and monetary policy-related developments that contributed to heightened market
fluctuations.

Natural gas spot prices at the US Henry Hub benchmark averaged $3.12 per million British thermal units
(MMBtu) in May 2025. Henry Hub's natural gas prices declined for the third consecutive month in May,
falling by ~8.8%, m-o-m. Softer demand due to mild weather reduced heating demand, thereby putting
downward pressure on prices. At the same time, high storage levels during the injection season kept the
market well supplied. Despite the monthly decline, prices were up by ~47.2%, y-o-y.

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