Oil prices are expected to remain in the low $70s this year due to increased supply and potentially weaker demand, according to analysts and investment banks.
Experts anticipate that the new U.S. administration will lead to a decrease in average oil prices compared to last year, as economic uncertainty has grown with the ongoing trade and tariff disputes.
OPEC+ to Increase Supply
OPEC+ announced earlier this month that it will begin increasing oil supply as soon as next month. However, the organization has kept the option open for adjustments, stating that the gradual supply increase could be paused or reversed based on market conditions.
Trade Policies and Economic Growth Concerns
President Donald Trump’s trade policies have created further uncertainty, especially regarding demand if global economies slow down due to tariffs.
Goldman Sachs recently revised its forecast for Brent Crude, lowering its year-end price to $71 per barrel. This adjustment reflects expectations of slower U.S. economic growth and additional supply from OPEC+. The bank acknowledged that risks to their forecast are tilted to the downside, particularly if tariffs escalate or OPEC+ continues to increase production.
Supply Surplus Could Weigh on Prices
HSBC analysts also forecast that oil prices could face downward pressure due to a surplus of supply this year and next. The bank predicts that supply growth will outpace demand growth, leading to a 200,000-barrel-per-day surplus.
Barclays, another major bank, has cut its price forecast for Brent Crude to $74 per barrel, down $9 from the previous estimate. The bank also downgraded its demand growth forecast for 2025, citing economic uncertainty and weaker indicators. Barclays now expects demand growth to reach 900,000 barrels per day this year.
Wood Mackenzie’s Outlook for 2025
Wood Mackenzie forecasts a lower average oil price of $73 per barrel for 2025, down from $80 in 2024. The consultancy points to the likelihood that supply will exceed demand, with non-OPEC production expected to rise by 1.4 million barrels per day, outpacing global demand growth of 1.1 million barrels per day.
Key Drivers of Oil Prices
The two main factors driving oil prices this year will be OPEC+ supply decisions and U.S. trade policies, Wood Mackenzie analysts say. Additionally, geopolitical developments, such as the situation in Ukraine and U.S. sanctions on Iran, could also impact prices.
Global economic growth is projected at 2.8% in 2025, though this could be revised lower by 0.5 percentage points depending on the outcomes of the trade war. A slower economy could reduce oil demand growth by 400,000 barrels per day from the current forecast of 1.1 million barrels per day.
In the event of weaker demand, Brent crude prices could average $3 to $5 per barrel lower than the current forecast of $73 per barrel.
OPEC’s Long-Term Outlook
OPEC maintains its view that oil demand will grow by 1.4 million barrels per day in both 2025 and 2026. The cartel left its demand forecast unchanged in its Monthly Oil Market Report last week.
However, the International Energy Agency (IEA) has a more cautious outlook. The Paris-based agency expects global oil demand to grow by just over 1 million barrels per day in 2025, reaching 103.9 million barrels per day. While this would be an increase from 2024, the IEA also projects that global oil supply could surpass demand by around 600,000 barrels per day this year.
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