Geopolitical tensions continue to inject a risk premium into oil prices. Yet that premium must be viewed in the context of significant non-OPEC supply growth that is reshaping the global balance.
Production increases from Guyana, Brazil, the United States and Canada are providing a substantial buffer to the market. Argentina and Suriname are also emerging as meaningful contributors. Depending on which forecast one considers, global markets could see a surplus of between 2.5 and 4 million barrels per day this year. With that level of cushion, geopolitical disruptions would need to be severe and sustained to drive prices dramatically higher.
Venezuela, over time, may also contribute additional barrels. Recent hydrocarbons law reforms represent a significant policy shift, arguably the most consequential in decades. However, rebuilding institutional capacity and restoring production to historic peaks above 3 million barrels per day will take time. Mexico, too, faces its own structural challenges in stabilizing output.
On the demand side, we should approach “peak” narratives cautiously. Over the past two decades, the industry has seen repeated declarations of peak supply and peak demand, many of them premature.
Forecasts often reflect policy preferences as much as hard fundamentals. The most durable energy transition story is unfolding in power generation, where solar and renewables are steadily expanding their share. But natural gas remains indispensable, and nuclear energy may regain momentum. Energy transitions are real, but they are evolutionary, not abrupt. Markets would do well to price realism rather than ideology.