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Global Category Intelligence
Q2 2025
Global Category Intelligence
Q2 2025
ALERT – Oil Surplus Looms, is an Energy Cost Reset Ahead?
Categories: Cost Management; Global Influences; Risk Management
Published: March 13, 2025
A Reuters report, published about eight hours ago, projects a 600,000-barrel-per-day (bpd) oil surplus for 2025, shaking up indirect procurement globally. Refining the IEA’s 950,000 bpd estimate, this forecast signals cheaper fuel ahead, a game-changer for managing energy and logistics spend. Amid U.S. tariff threats and OPEC+ flux, indirect procurement leaders face a critical window to adapt, balancing savings against volatility.
The surplus could drop Brent crude from $73–$78 per barrel to $60–$65, per Goldman Sachs’ March 5 outlook, easing costs for shipping and utilities—core indirect categories. Yet, Trump’s proposed 25% tariffs on Canada/Mexico and 10% on China, reiterated this week, cloud the picture, potentially hiking logistics expenses.
Why It’s Urgent for Indirect Procurement Leaders
Fuel and logistics, linchpins of indirect spend, hinge on energy forecasts, and a 600,000-bpd surplus signals lower prices ahead. Firms budgeting $70–$80 per barrel for 2025 may consider rethinking – lock in savings or risk overpaying if prices tank. Q1 budget deadlines amplify the pressure, while tariffs add uncertainty. Cheaper crude could slash freight costs, but oversupply might strain refining, increasing diesel or jet fuel prices. Procurement leaders may need to move fast to seize this opportunity amid a shifting landscape.
What’s Driving the Surplus?
The surplus reflects converging trends: Weak Demand—China’s oil growth has slumped to 140,000 bpd in 2024 from 1.4 million in 2023, per IEA, hit by EVs and economic woes; global demand crawls at 990,000 bpd for 2025. Supply Glut—U.S. output nears 13.55 million bpd, with Brazil and Guyana piling on; OPEC+ may unwind cuts (138,000 bpd monthly from April) despite 680,000 bpd overproduction in November. Trade Tensions—Trump’s tariffs threaten growth, softening demand further. Reuters’ 600,000 bpd tightens IEA’s base case, capturing fresh OPEC+ and market shifts.
Key Takeaways
With a 600,000-barrel-per-day oil surplus looming for 2025, indirect procurement leaders must adapt energy and logistics strategies. The Reuters forecast offers savings but carries risks from tariffs and market shifts. Here’s how to turn this surplus into opportunity while safeguarding against volatility:
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Scenario Planning: Model budgets for Brent at $60–$65 versus $75–$80. Savings could be substantial, but tariffs or sanctions (e.g., Russia) might spike costs—plan for both.
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Supplier Negotiations: With fuel prices set to dip, renegotiate logistics and fuel contracts now, especially in tariff-exposed North America, to lock in lower rates.
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Risk Mitigation: Diversify sourcing—tap U.S. shale if Canadian supply falters—or explore renewables to hedge fossil fuel swings. Monitor refining capacity; storage bottlenecks could hike derivative costs.
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