The price of Brent crude ended the week at $63.88 after closing the previous week at $61.29. The price of WTI ended the week at $61.06 after closing the previous week at $58.29. The price of DME Oman crude ended the week at $64.76.  

Weekly Oil Price Outlook

President

John E. Paisie

This weekly report is an excerpt from our&nbsp;<a href="~/services/services?ContentID=190" target="_self">Short-Term Outlook service</a>&nbsp;analysis, which covers a period of eight quarters and provides monthly forecasts for crude oil, natural gas, NGL, refined products, base petrochemicals and biofuels.&nbsp; Contact John Paisie (+1-832-517-7544) for the detailed analysis or for more information about the Short Term Outlook.
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<img src="https://cdn.aglty.io/stratas-advisors/upload/051225-WAOP_20250512085530.png?w=800" alt="chart">
The price of Brent crude ended the week at $63.88 after closing the previous week at $61.29. The price of WTI ended the week at $61.06 after closing the previous week at $58.29. The price of DME Oman crude ended the week at $64.76. &nbsp;<o:p></o:p>
Last week, oil prices got a boost from the US and the UK agreeing to a trade deal, with hints of more deals on the way. During this past weekend, representatives from China and the US met in Geneva to discuss trade and tariffs. US officials said on Sunday that substantial progress had been made and that a deal had been made with China to reduce the U.S. trade deficit with China. At the time of this writing, few details are known, but the US Treasury Secretary, Scott Bessent, indicated that a statement would be released on Monday. While all the details may not be established, oil prices will get another boost from this &ldquo;deal&rdquo;, given the size of the two economies and the extent of the trade between China and the US.&nbsp;<o:p></o:p>
Oil prices will also get some support from geopolitics. The geopolitical environment continues to be wobbly with the conflict between Russia and Ukraine still unresolved, the tensions in the Middle East remaining elevated, and the remaining uncertainty surrounding the conflict between India and Pakistan. Additionally, the EU is threatening Russia with new sanctions unless Russia adheres to an unconditional 30-day ceasefire. It has been reported that the sanctions will affect people, entities, and vessels that are involved in the movement and trading of Russian oil, including sanctions against companies based in Vietnam, Turkey, and Serbia...
<h2><a href="~/members/members?ContentID=79417" title="" target="_blank" rel="noopener">Read More &gt;&gt;</a></h2>
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For a complete forecast of crude oil and refined products and other energy-related fundamentals and prices, please refer to our&nbsp; <a href="~/services/services?ContentID=190" target="_blank" rel="noopener">Short-term Outlook</a>.

Trade “Deals” Provide a Boost 

This weekly report is an excerpt from our&nbsp;<a href="~/services?ContentID=190" target="_self">Short-Term Outlook service</a>&nbsp;analysis, which covers a period of eight quarters and provides monthly forecasts for crude oil, natural gas, NGL, refined products, base petrochemicals and biofuels.&nbsp; Contact John Paisie (+1-832-517-7544) for the detailed analysis or for more information about the Short Term Outlook.
<hr>
<div style="margin: 0px; padding: 0px; border: 0px;">
<img src="https://cdn.aglty.io/stratas-advisors/upload/051225-WAOP_20250512085530.png?w=800" alt="chart">
The price of Brent crude ended the week at $63.88 after closing the previous week at $61.29. The price of WTI ended the week at $61.06 after closing the previous week at $58.29. The price of DME Oman crude ended the week at $64.76. &nbsp;<o:p></o:p>
Last week, oil prices got a boost from the US and the UK agreeing to a trade deal, with hints of more deals on the way. During this past weekend, representatives from China and the US met in Geneva to discuss trade and tariffs. US officials said on Sunday that substantial progress had been made and that a deal had been made with China to reduce the U.S. trade deficit with China. At the time of this writing, few details are known, but the US Treasury Secretary, Scott Bessent, indicated that a statement would be released on Monday. While all the details may not be established, oil prices will get another boost from this &ldquo;deal&rdquo;, given the size of the two economies and the extent of the trade between China and the US.&nbsp;<o:p></o:p>
Oil prices will also get some support from geopolitics. The geopolitical environment continues to be wobbly with the conflict between Russia and Ukraine still unresolved, the tensions in the Middle East remaining elevated, and the remaining uncertainty surrounding the conflict between India and Pakistan. Additionally, the EU is threatening Russia with new sanctions unless Russia adheres to an unconditional 30-day ceasefire. It has been reported that the sanctions will affect people, entities, and vessels that are involved in the movement and trading of Russian oil, including sanctions against companies based in Vietnam, Turkey, and Serbia.&nbsp;<o:p></o:p>
So, for another week, concerns about supply outstripping demand will be put aside. The concerns, however, remain valid. At the last OPEC+ meeting that took place on May 3, members of OPEC+ agreed to increase supply by 411,000 b/d in June after increasing supply by a similar amount in May, which was three times the amount previously indicated. OPEC+ is also indicating that a similar level of supply increase will take place in July, and will continue in August, September, and October &ndash; unless the chronic over-producers (including Kazakhstan, Iraq, and Russia) not only comply with previously agreed quotas but also reduce supply further to account for early oversupply. If OPEC+ moves forward with an accelerated plan, the unwinding of voluntary cuts of 2.2 million b/d will be completed in November of this year, instead of September 2026, which was agreed to last December. Even if the tariff issue goes away, demand will not be sufficient to soak up this level of additional supply. Therefore, for oil prices not to move significantly downward, some supply will have to be removed. <o:p></o:p>
Even before the latest downturn in oil prices, Saudi Aramco&rsquo;s finances were under pressure, with net income for Q1 decreasing by nearly 5% from the previous year, with realized oil prices, on average, falling from $83.00 in Q1 2024 to $76.30 in Q1 2025. In response to the falloff in net income, Saudi Aramco announced that its quarterly dividend will be cut by $10 billion. In March, Saudi Aramco had indicated that its dividend payout for 2025 would be $85.4 billion. During 2024, Saudi Aramco&rsquo;s dividends were $124.3 billion. The reduction in payouts is also affecting the fiscal situation of Saudi Arabia, which is projected to run a deficit in 2025. Regardless, the production cuts are more likely to come from US shale producers if OPEC+ moves forward with the indicated supply increases. <o:p></o:p>
Our upstream team has recently completed a breakeven analysis of US shale oil producers operating in the major oil plays &ndash; Permian, Eagle Ford, Bakken, and DJ (https://www.stratasadvisors.com/members/breakeven-cost-analysis-of-us-shale-oil-operators/04242025). The breakeven analysis was done for the following tiers: operating breakeven, debt service breakeven, sustaining capex breakeven, and dividend sustaining breakeven. The analysis highlights the Permian Basin's sustained competitive advantage. With the next-to-lowest operating breakeven of $42.90/bbl. and the lowest full-cycle breakeven of $68.17/bbl. In contrast, higher-cost basins such as the Bakken and DJ present more fragile financial structures. The Bakken&rsquo;s capex breakeven of $83.88/bbl. and dividend breakeven of $92.74/bbl. indicate that most operators are currently unable to sustain drilling and distributions without relying on debt or cash from higher-margin assets. Similarly, the DJ Basin&mdash;while lower cost than the Bakken&mdash;still struggles with a dividend-sustaining breakeven of $80.58/bbl. These dynamics limit both growth and shareholder return and will likely lead to reduced rig activity, delayed completions, or a shift toward only high-return zones in 2025.
For a complete forecast of crude oil and refined products and other energy-related fundamentals and prices, please refer to our <a href="~/services/services?ContentID=190" target="_blank" rel="noopener">Short-term Outlook</a>.
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