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Investing.com -- Oil prices have remained range-bound recently despite high geopolitical uncertainty, with analysts saying the sector’s fundamentals continue to support a positive outlook for energy earnings.
In a Monday note to clients, Barclays energy analyst Amarpreet Singh reiterated the constructive stance on the sector, pointing to resilient demand and persistent supply constraints across key producing nations.
Recent data showed that global oil inventories declined in the first half of 2025 (H1 25), countering expectations of a surplus.
“In addition to the lack of inventory build-up in H1 25, evidence of supply constraints among OPEC+ members also bolsters our constructive view on oil prices,” Singh said in a note.
While the group lifted production targets by 1.4 million barrels per day by July, actual output only rose by 0.5 million barrels per day, as several members struggled to meet quotas.
Geopolitical risks remain an important factor. The Trump-Putin summit failed to deliver progress on Ukraine, raising the prospect of new sanctions on Russia, while Iran faces an August-end deadline to resume nuclear talks or risk broader United Nations penalties.
The U.S. has already expanded sanctions targeting Iranian oil exports. Barclays said these developments could further tighten supply and support pricing.
Outside of OPEC+, U.S. production has tracked forecasts, though weekly data point to a slight decline since late 2024.
Brazilian output, however, surprised to the upside in July, nearing 4 million barrels per day as more pre-salt wells came online.
“Based on the expected development pipeline and our view of base declines, we think oil output growth from Brazil will likely decelerate sharply again next year,” Singh said.
Looking ahead, Barclays’ price forecasts remain above both market curves and consensus estimates.
For Brent, the bank projects $74 per barrel in Q4 2025 and $70 in Q1 2026, compared with the forward curve and consensus sitting lower.
For WTI, forecasts stand at $71 and $67 over the same periods, also ahead of market expectations.
“Oil markets defied expectations of a large surplus in H1 25 and key OPEC+ producers have not been able to keep up with the increase in production targets,” the analyst said.
Barclays also maintained its long WTI calendar spreads recommendation.