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Highlights
- Oil dips trigger pressure on ASX energy stocks
- Petrol prices expected to fall further
- Analysts see potential for oil to test $US50
Global oil markets were thrown into fresh turmoil this week after a surprise production boost by OPEC+ intensified concerns of oversupply amid weakening demand. The unexpected move has had an immediate impact on the ASX200 energy sector, with major players seeing sharp declines as crude prices continue their downward slide.
Over the weekend, the Organisation of the Petroleum Exporting Countries and its allies, led by Saudi Arabia and Russia, announced an increase in oil output by 411,000 barrels per day starting in June. The decision, aimed at penalising countries like Kazakhstan and Iraq for exceeding their quotas, sent Brent crude plummeting by 4.6% to around $US58 per barrel. West Texas Intermediate followed closely, dipping 4% to nearly $US56 per barrel.
The ripple effect was quickly felt on the Australian Securities Exchange. Among the hardest hit was (ASX:WDS), down 3.3% to $19.93, followed by (ASX:STO) which dropped 3% to $5.90. (ASX:BPT) also saw a 3.3% dip to $1.16 during early trading hours.
This development comes as crude prices return to levels not seen in nearly four years, with the looming fear that oil could fall below $US50 per barrel. Such a decline may pressure US producers to make supply cuts in an effort to rebalance the market. The move has not only unsettled investors but also prompted a wave of forecast downgrades from major financial institutions.
Morgan Stanley has lowered its Brent crude projection by $US5 per barrel, now expecting it to average $US62.50 in the second half of 2025. Goldman Sachs has gone further, predicting Brent could hover around $US60 this year and fall to $US56 by 2026. The bank cited high spare capacity and elevated recession risk as key downward pressures on prices.
Despite the market volatility, motorists could see a silver lining. With Tapis crude – the benchmark for regional unleaded – dropping $US13 since early April, Australian wholesale petrol prices have eased to $1.57 per litre. Prices at the pump are projected to decline by up to 30¢, bringing relief to consumers as average Sydney prices may fall closer to $1.60 per litre.
These shifts have also drawn fresh attention to ASX dividend stocks, as investors reconsider portfolios amid energy sector uncertainty. As the ASX200 reacts to global commodity dynamics, eyes will remain fixed on whether oil markets stabilize or slide further into uncharted territory.
