The latest monthly report from OPEC shows that the cartel has revised its global oil demand growth forecast for 2025 downward for the first time since December, now projecting an increase of 1.3 million barrels per day (bpd) — 150,000 bpd less than previous estimates. The revision stems largely from slower-than-expected consumption and new U.S. tariffs that have rattled trade dynamics and economic sentiment globally. As President Trump ramps up tariff measures, including a 125% levy on Chinese imports, investors are growing increasingly wary about how this might dampen energy demand, particularly in emerging markets.
Despite these geopolitical headwinds, oil prices remain relatively steady, with WTI crude hovering over $60 per barrel. However, volatility is high. Crude futures are down more than 10% so far this month, largely on fears that slowing global trade and rising supply will pressure prices. Against this backdrop, it may be wise for investors to adopt a more defensive approach—one that focuses on large, resilient players like Chevron CVX, ConocoPhillips COP, and EOG Resources EOG. These companies have the scale, balance sheets, and capital discipline to navigate turbulence, making them safer bets in uncertain times.
Demand Softens Amid Economic Uncertainty
OPEC’s cautious tone isn’t just based on oil-specific fundamentals. The group’s Monthly Oil Market Report also trimmed its global economic growth outlook for 2025 to 3.0%, from 3.1%, reflecting growing uncertainty in light of the ongoing trade tensions. The U.S. economy is forecasted to expand by 2.1% in 2025, while growth in the Eurozone and China is expected to slow to 0.8% and 4.6%, respectively. These projections imply weaker industrial activity and transport fuel demand—the key drivers of global oil consumption.
OECD nations are forecast to contribute a mere 40,000 bpd to demand growth in 2025, while non-OECD countries, traditionally the growth engine, are expected to add around 1.25 million bpd. However, these numbers could fall if trade tensions and inflation continue to hurt energy use by consumers and businesses.
Supply Dynamics: OPEC+ Output and the U.S. Role
On the supply front, OPEC’s report showed that the broader OPEC+ group reduced output slightly in March, with total production falling by 37,000 bpd to 41.02 million bpd. Cuts from Nigeria and Iraq offset gains from Kazakhstan, which continues to exceed its output cap. However, OPEC+ is scheduled to increase output again in May, raising questions about how the additional barrels will be absorbed in a softer demand environment.
Meanwhile, non-OPEC supply growth has also been revised down. OPEC now expects non-OPEC+ liquids production to rise by 900,000 bpd in 2025—100,000 bpd less than previously forecast. Most of this increase is still expected to come from the U.S., Canada, Brazil, and Argentina. However, with U.S. shale growth slowing and cost inflation a growing concern, the global supply outlook looks slightly more balanced than a month ago.
Where Are Oil Prices Headed?
The near-term outlook for oil is shaped by two opposing forces: weak demand growth weighed down by economic uncertainty and trade friction, versus constrained supply growth and OPEC+ discipline. While the trade war has clouded investor sentiment, the fundamentals don’t suggest a collapse. Air travel demand remains solid, road mobility is recovering, and oil use is still expected to grow, albeit at a slower pace.
Moreover, OPEC’s view remains more optimistic than other forecasters. While Goldman Sachs and Morgan Stanley have cut their demand forecasts sharply, OPEC still sees long-term demand trending higher, unlike the Paris-headquartered International Energy Agency (IEA), which anticipates a peak within the decade.
For investors, the takeaway is clear: volatility is here to stay. But energy is still a vital part of the global economy, and demand isn’t going away—it’s just shifting. That’s why it’s smart to stick with strong, stable companies that generate solid cash flow.
Conclusion: Lean on the Defensives
With tariffs roiling markets and macro uncertainty clouding short-term outlooks, it’s prudent to hold on to proven, cash-generating energy stocks. Companies like Chevron, ConocoPhillips, and EOG Resources offer resilience and upside potential once the market regains clarity.
OPEC’s latest report may signal a slower pace of demand growth, but it also confirms that oil is still very much a necessary commodity. In times like these, investors should stay patient, avoid chasing volatility, and lean on the Zacks Rank #3 (Hold) names best equipped to ride out the storm.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Chevron: Chevron is well-run and historically a profitable big oil giant. Chevron’s upstream portfolio remains a key strength, with strong production growth from the Permian Basin and Kazakhstan. The company is targeting a 6% annual production increase through 2026, with high-margin projects driving long-term value. Chevron continues to be a strong dividend player, having increased its payout for 37 consecutive years. The latest dividend hike of 4.9% takes its yield to over 4%, making it a reliable income source for long-term investors.
ConocoPhillips: Based on production and reserves, ConocoPhillips is among the leading upstream energy players in the United States. In 2024, COP produced a record 1,987 thousand barrels of oil equivalent per day globally, thanks to its strong presence in the prolific low-cost resources in the U.S. Lower 48 and Alaska, along with Asia, Australia, Africa, Europe and Canada. ConocoPhillips, with a debt-to-capitalization of 27.3%, is also demonstrating its strong financials and is well-positioned to navigate the tariff-induced market uncertainty.
EOG Resources: In the United States, EOG is among the largest oil and natural gas exploration and production companies. As of year-end 2024, the firm reported total net proved developed reserves of 2,566 million barrels of oil equivalent. Despite the decline in oil prices, EOG’s operations in low-cost resources like the Delaware Basin, a sub-basin of the broader Permian and Eagle Ford shale play, are still profitable. EOG Resources also has a strong balance sheet that the upstream player can rely on to ride the current uncertain business environment. Notably, EOG Resources’ low debt-to-capitalization of 13.9% is considerably below the industry’s 51.4%.
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