Oil Prices Face Uncertainty in 2025
As the global economy navigates uncertain waters, oil prices are expected to remain subdued in 2025. A recent poll of 31 economists and analysts suggests that Brent crude will average $74.33 per barrel next year, down from previous forecasts.
Weak Demand from China Weighs on Oil Prices
China, the world’s top oil importer, is experiencing sluggish demand, which is casting a shadow on OPEC+-led efforts to stabilize the market. The global benchmark Brent crude has averaged around $80 a barrel so far this year, but is poised for a 3% yearly decline.
Rising Global Supplies to Keep Market Well-Supplied
Non-OPEC countries are expected to increase production, keeping the market well-supplied. While an economic recovery in China is anticipated, the shift to electric vehicles is likely to limit demand growth. According to Sehul Bhatt, director of research at CRISIL, “Rising production from non-OPEC countries is expected to keep the market well-supplied.”
OPEC+ Faces Challenges in 2025
OPEC+, which pumps about half the world’s oil, recently pushed back the start of oil output rises by three months until April 2025 and extended the full unwinding of cuts by a year until the end of 2026. However, analysts predict that supply will outpace demand, leaving limited room for OPEC+ to raise production.
Global Oil Demand Growth Slows
Global oil demand is expected to grow between 0.4 million and 1.3 million barrels per day in 2025, lower than OPEC’s estimate of 1.45 million bpd. Markets are also bracing for substantial policy shifts, including tariffs, deregulation, and tax amendments, as Donald Trump prepares to return to the White House in January 2025.
US Politics and Oil Prices
While some analysts believe that US politics will have a limited impact on oil prices, others note that intensified sanctions on Iranian oil exports by the Trump administration could offer support to oil prices in the short term. According to Kim Fustier, head of European oil & gas research at HSBC, “In general, we think U.S. politics matter less than many believe when it comes to the impact on oil prices and the U.S. domestic oil & gas sector.”
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