S&P/ASX 200 Index (ASX: XJO) energy shares are taking a beating today.
In late morning trade on Monday, the ASX 200 is down 0.2%. And it's certainly not getting any help from the big Aussie oil and gas stocks.
Here's how these top four producers are performing at this same time:
- Woodside Energy Group Ltd (ASX: WDS) shares are down 1.9%
- Santos Ltd (ASX: STO) shares are down 1.7%
- Beach Energy Ltd (ASX: BPT) shares are down 6.9%
- Karoon Energy Ltd (ASX: KAR) shares are down 3.3%
Unfortunately, today's underperformance for these ASX 200 energy shares is more par for the course in 2024 than any major divergence.
Here's what I mean.
Despite today's retrace the benchmark index remains up 10.0% year to date. As for the oil and gas companies:
- The Woodside share price is down 24.9 % in 2024
- The Santos share price is down 15.7% in 2024
- The Beach Energy share price is down 25.4% in 2024
- The Karoon Energy share price is down 37.2% in 2024
After such a rough run in 2024, can investors expect a better year ahead in 2025?
More headwinds for ASX 200 energy shares in 2025?
Each company will face its own unique operational issues in 2025 (some likely good, some perhaps not so good). However, a major factor impacting all of the ASX 200 energy shares will be the price they receive for the oil and gas they pump from the earth.
On that front, international benchmark Brent crude oil is currently trading for US$71.17 per barrel. That's right about where the oil price was on Friday. But it's down from US$75.89 per barrel on 2 January. And down from highs of US$91.17 per barrel on 5 April.
Which explains some of the pressure the ASX 200 energy shares have been under this year.
Unfortunately for shareholders, that pressure may continue in 2025.
Last Thursday (overnight Aussie time) a number of leading members of the Organization of the Petroleum Exporting Countries and its allies (OPEC+) met ahead of tomorrow's full members conference.
According to the attending members, including Saudi Arabia and Russia, "The meeting was conducted to reinforce the precautionary efforts of OPEC+ countries, aiming to support the stability and balance of oil markets."
Among the key takeaways, the members agreed to delay the planned rollback of existing voluntary production cuts of 2.2 million barrels per day by three months until April. The cuts will also remain in place for nine months longer than previously reported, now expected to last through to September 2026.
How oil market analysts reacted
The move by OPEC+ saw Morgan Stanley increase its oil price forecast for 2025. However, Morgan Stanley still expects oil prices to average slightly below current levels in the year ahead, which isn't the direction ASX 200 energy shares will be hoping for.
As Reuters reports, the broker increased its forecast for Brent crude in the second half of 2025 to US$70 per barrel. That's up from the previous forecast of US$66 to US$68 per barrel.
"In aggregate, this reduces our estimated surplus in 2025 from 1.3 to 0.8 million bpd in our total liquids balance, and from 0.7 to 0.3 million bpd in our crude-only balance," Morgan Stanley stated.
The OPEC+ meeting didn't sway HSBC's forecast. HSBC now expects a reduced global oil surplus of 0.2 million barrels per day next year but maintained its US$70 per barrel price forecast for Brent crude through the end of 2025.
Bank of America's forecast is the most bearish for ASX 200 energy shares. The investment bank expects the Brent crude oil price will average just US$65 per barrel in 2025, barring any major production adjustments from OPEC+.
BofA said that "the Achilles' heel" for the cartel is weak global demand growth.
"Demand growth has slowed this year and is expected to remain tepid in 2025 too, tipping the market into surplus next year," it said.
