The U.S. Energy Information Administration (EIA) has revised its 2024 and 2025 Brent crude oil price forecasts in its latest Short-Term Energy Outlook (STEO), released this week.
The EIA now predicts that the average Brent spot price will be $80.49 per barrel in 2024, down slightly from its November forecast of $80.95. For 2025, the agency has lowered its price estimate to $73.58 per barrel, compared to the previous projection of $76.06.
A quarterly breakdown in the December STEO shows the EIA expects the Brent price to average $74.37 per barrel in Q4 2023. For the first three quarters of 2024, it predicts the price will hover around $74 per barrel, with a slight decline to $72 in Q4 2025.
In contrast, the November STEO had forecasted a higher Brent price of $76.20 per barrel for Q4 2023 and estimates ranging from $78 to $73 for 2024 and 2025.
The EIA also noted that the Brent spot price averaged $74 per barrel in November, which was $1 less than in October. It attributed the slight drop to a ceasefire between Israel and Hezbollah in Lebanon, which eased some of the geopolitical risk that had been driving oil prices higher. The EIA also highlighted slowing oil demand growth, particularly in China, as a factor weighing on prices.
Additionally, the EIA pointed to OPEC+ decisions affecting the market. Last week, some OPEC+ members agreed to delay planned production increases until April 2025. The EIA assumes that OPEC+ will align its production with new targets, keeping the oil market relatively balanced throughout 2025.
The EIA’s report predicts global oil inventories will remain stable through 2025. Ongoing OPEC+ production cuts are expected to reduce inventories by 0.4 million barrels per day on average in 2024. These cuts could lead to further inventory declines of 0.7 million barrels per day in the first quarter of 2025. However, the ramp-up of OPEC+ production and increased supply from non-OPEC countries is likely to reverse this trend, resulting in a modest build-up in inventories during the remainder of 2025.
The EIA forecasts that the increase in inventories will exert downward pressure on oil prices later in 2025. The Brent price is expected to fall from an average of $74 per barrel in Q1 2025 to $72 in Q4 2025.
The report also cautioned that two main factors continue to create price uncertainty: the ongoing conflict in the Middle East and the ability of OPEC+ members to adhere to their production cuts. The EIA noted that the risk premium related to Middle Eastern instability had moderated recently, but any escalation in the conflict could reduce oil supplies and increase volatility. Furthermore, the EIA expressed concern about potential weakening commitment from OPEC+ producers to maintain production cuts, which could further depress oil prices.
In a separate report, J.P. Morgan predicted that Brent crude will average $80 per barrel in 2024, slightly lower than its previous forecast. For 2025, J.P. Morgan expects the price to drop to $73 per barrel.
Meanwhile, Standard Chartered forecasted a more optimistic outlook, predicting Brent will average $89 per barrel in Q1 2024, rising to $92 in Q2, $95 in Q3, and $93 in Q4. The bank expects global demand to grow by 1.31 million barrels per day in 2025, with non-OPEC supply increasing by 0.96 million barrels per day. Despite this, they project a slight global supply deficit for 2025, even without disruptions to Iranian oil exports.
The EIA’s forecast, along with predictions from J.P. Morgan and Standard Chartered, reflects the ongoing uncertainty and volatility in global oil markets as key geopolitical and production-related factors continue to influence prices.
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