Citi analysts have projected that Brent crude oil prices will average $60 per barrel next year, citing the policies of the incoming U.S. administration as a key factor behind the forecasted decline.
The analysts pointed to the potential impact of import tariffs and increased oil production as primary drivers of this lower price outlook. They also suggested that former President Donald Trump could use his influence over OPEC+ to encourage the group to increase supply, including the release of oil stored in floating reserves.
In addition, Citi analysts believe Trump’s presidency could ease geopolitical tensions, further pushing down oil prices. However, they noted that stronger government support for oil and gas investments could boost domestic production, though the immediate effects on global oil markets would likely be limited.
Goldman Sachs analysts, while acknowledging the complexity of the situation, warned that Trump’s policies could introduce short-term risks to Iran’s oil supply, which could cause price fluctuations. They also noted that Trump’s trade policies could dampen demand and push prices lower.
Furthermore, there are concerns that pro-growth energy policies could drive increased oil production but also lead to falling prices. Lower prices could, in turn, reduce the incentive for further production, creating a cycle that has historically impacted the industry.
Cole Smead, president of Smead Capital, pointed out that opening up federal lands for oil and gas extraction could lead to more production, but companies would face challenges in making profits at lower prices. “It’s hard to find an oil company that can make money at $52.50 per barrel with what’s left after a $70 barrel,” Smead told CNBC.
Related Topics:
- OPEC+ Tapering Strategies Will Continue to Control Oil Prices
- Today’s WTI Crude Oil Price Chart (November 7)
- Today’s Brent Crude Oil Price Chart (November 7)