TotalEnergies has issued a warning that global oil markets are facing excess supply as Opec+ increases production amid weakening demand.
Oil Supply Excess and Demand Decline
In its Q2 earnings call, TotalEnergies stated that Saudi Arabia and its Opec+ allies are reintroducing additional barrels into the market to capture market share. Simultaneously, slowing economies in major markets are dragging down consumption. As a result, the market is experiencing an excess of oil with not enough buyers.
TotalEnergies Financial Results
In Q2, the company's net income fell by 30% year-over-year to $2.7 billion, below analysts' expectations. The company also experienced a 20% drop in earnings from its LNG division due to lower prices across both oil and gas. Despite this, TotalEnergies decided to maintain its dividend at €0.85 per share and confirmed its $2 billion share buyback plan.
Global Economic Factors and Forecasts
The broader oil market is showing uncertainty. On the same day TotalEnergies released its report, Brent crude rose by $0.79 to reach $69.30 per barrel, while U.S. West Texas Intermediate increased by $0.83 to $66.08. However, with uncertainty surrounding U.S.-China trade talks and global conflicts, such as the situation in Ukraine, expectations remain subdued.
Thus, TotalEnergies highlights significant challenges for oil markets, including supply excess and demand slowdown, which may negatively impact prices in the future.
