Fitch Ratings forecast that oil prices will average $70 per barrel in 2025, driven by slower demand growth and increased production from non-OPEC+ countries. This forecast aligns with the subdued demand growth seen this year, and the slower pace compared to 2022 and 2023.
Currently, oil prices are averaging around $80 per barrel in 2024. Fitch attributed the expected price decline to a combination of moderating demand and an oversupply due to rising production outside the OPEC+ group. The agency noted that while geopolitical tensions could push oil prices higher, the substantial spare capacity within OPEC+ could help manage supply and prevent significant price increases.
Earlier in December, OPEC+ decided to delay reducing its production cuts of 2.2 million barrels per day (bpd) until April 2025, instead of the original January timeline. The group also extended the period for unwinding these cuts until September 2026.
As a result of OPEC+’s decision, the surplus in the oil market next year may be smaller than initially anticipated. However, analysts still expect a surplus in 2025.
The International Energy Agency (IEA) echoed this outlook in its December report, predicting a large supply surplus next year. Even if OPEC+ maintains its current production levels through 2025, the IEA expects a supply surplus of 950,000 bpd. If OPEC+ starts unwinding its cuts by March 2025, the surplus could expand to 1.4 million bpd.
Global oil demand is projected to grow by 1.1 million bpd in 2025, reaching 103.9 million bpd. However, total oil supply is expected to increase by 1.9 million bpd, surpassing demand and reaching 104.8 million bpd, even without OPEC+’s production adjustments.
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