Oil Prices in 2025: What Do The Experts Say?

As of September 2024, the preliminary OPEC oil price for 2024 stood at $81.98 per barrel, a decrease from the average price in 2023. But what can traders expect from oil markets in 2025? Let’s take a look.

Brent crude at $60/barrel; WTI to reach $70/barrel

Citi projects Brent crude prices to average $60 per barrel and West Texas Intermediate (WTI) to climb to $70 per barrel, with market pressures expected to influence prices through 2025. President-elect Donald Trump's policies, favoring increased oil supply, could drive this trend. 

OPEC+ may respond by scaling back production cuts faster than anticipated, reducing geopolitical tensions, and releasing stored oil into the market. These factors are likely to cap crude prices despite potential boosts in demand. However, the market's trajectory will also hinge on broader economic conditions, including global trade dynamics and currency fluctuations.

Possible OPEC+ production boosts

Trump's energy agenda could shift OPEC+ strategies, as his administration may support industry-friendly policies such as tax incentives for exploration and reduced federal land leasing costs. These measures might encourage higher US production, prompting OPEC+ to reconsider its production levels to maintain market balance. 

Citi expects this policy environment to accelerate the group's tapering of production cuts, potentially leading to an oversupplied market. While this may stabilize short-term prices, it introduces volatility risks, especially if global oil demand underperforms due to weaker economic growth in regions like Europe and China.

USD may rally, putting downward pressure on oil

The US Dollar's post-election rally, reaching levels unseen since September 2022, exerts significant downward pressure on oil prices. A stronger Dollar makes crude more expensive for non-US buyers, dampening demand. Trump's trade policies, including potential tariffs, may further bolster the Dollar while simultaneously weighing on global economic growth. 

In this environment, oil markets face a double challenge: suppressed demand due to a stronger Dollar and sluggish global growth. These dynamics could create headwinds for sustained oil price recovery, limiting upward momentum despite supportive industry policies.

Oil growth to decelerate from 1.3 mbd to 1.1 mbd

J.P. Morgan forecasts global oil demand growth to slow from 1.3 million barrels per day (mbd) in 2024 to 1.1 mbd in 2025. While China is expected to lead oil demand growth for the final time next year, India is anticipated to take the mantle starting in 2026. 

This deceleration reflects maturing demand in key markets and shifts in energy consumption patterns. Slower global growth and energy efficiency improvements may also contribute to reduced demand expansion. The bank highlights that these changes in growth dynamics, combined with a large anticipated supply surplus of 1.3 mbd in 2025, will likely weigh on oil markets.

J.P. Morgan forecasts $73/bbl average

J.P. Morgan predicts Brent crude will average $73 per barrel in 2025, closing the year below $70, with West Texas Intermediate (WTI) averaging $64. A projected surplus of 1.3 mbd and weak supply-demand fundamentals underpin these estimates. 

The bank foresees Brent dipping below $60 by late 2026, with annual averages of $61 for Brent and $57 for WTI. This outlook assumes OPEC+ maintains current production levels. While deregulation under US president-elect Trump could support higher US production and exert downward price pressure, geopolitical uncertainties related to Iran, Venezuela, and Russia could still introduce upside risks. Such dynamics underscore the market's ongoing vulnerability to geopolitical and policy shifts.

Global oil consumption is expected to rise by 1.2 million b/d in 2025

Global oil consumption is forecast to grow by 1.2 million barrels per day (b/d) in 2025, driven primarily by India, which will account for 25% of the increase in 2024 and 2025. This growth highlights India's expanding economy and reliance on liquid fuels, contrasting with slower demand growth in developed nations transitioning to cleaner energy.

Following a 1.0 million b/d increase in 2024, rising global demand reflects a continued recovery in the industrial and transportation sectors. Geopolitical risks and OPEC+ production cuts are expected to tighten inventories in early 2025, pushing Brent crude prices to $78 per barrel in Q1. However, increasing production and inventory buildup are forecast to ease prices to $74/b in the year's second half.

Limited upside in prices as per Goldman Sachs 

Goldman Sachs forecasts average oil prices at $76 per barrel in 2025, citing ample spare capacity and trade tariffs as limiting factors. Current prices align with this outlook, with Brent Crude at $74.60 and WTI at $70 following higher US inventory reports.

While Iranian oil production remains stable, Goldman warns that a 2025 supply glut isn't certain. Geopolitical risks, particularly in the Middle East, could potentially drive prices higher.

The bank recently lowered its Brent range to $70-$85 per barrel due to rising US shale output and weaker Chinese demand. Similarly, Morgan Stanley expects a surplus by 2025 amid softening global demand.

Gasoline prices expected to fall to $3.22 per gallon

The EIA forecasts US gasoline prices to average $3.22 per gallon in 2025, 7 cents lower than prior estimates, driven by falling crude oil prices. Diesel prices are expected to average $3.55 per gallon in 2025, down 18 cents, while holding steady at $3.76 per gallon in 2024.

Crude oil price forecasts for 2024 were reduced to $80.89 per barrel for Brent and $73.13 for WTI, reflecting lower demand growth. US oil production is projected at 13.22 million barrels per day (b/d) in 2024, rising to 13.54 million b/d in 2025 despite a slight slowdown in activity.

Global oil inventories projected to continue falling

The EIA expects global oil inventories to decline by 600,000 barrels per day (b/d) in early 2025, following a drawdown of 800,000 b/d in late 2024 due to OPEC+ cuts.

Demand growth estimates were reduced to 103.06 million b/d for 2024 and 104.35 million b/d for 2025, citing weaker activity in China and OECD nations. Rising production from the US, Brazil, and Canada is expected to balance supply by mid-2025 despite tensions in the Middle East adding short-term uncertainty.

Oil prices set for moderate growth in 2025

In 2025, oil prices are expected to face downward pressure due to slower global demand growth, particularly in China and OECD countries. Despite rising oil consumption, geopolitical tensions and increasing production from non-OPEC+ nations may cap price increases, keeping Brent and WTI at moderate levels.