2025 oil price forecast: expert insights on Brent and WTI. Discover how OPEC+, U.S. policy, and geopolitical tensions may impact oil prices next year.
As we look towards 2025, oil price forecasts are a key focus for investors and industry stakeholders. Currently, Brent crude sits at around $74 per barrel, with WTI trading slightly lower at $72 per barrel. The price of oil is influenced by a variety of factors, including the latest decision by OPEC+ to extend production cuts and ongoing geopolitical instability in the Middle East. These elements will likely shape the oil price forecast for 2025.
OPEC+ and the Middle Eastern conflict: key factors impacting oil prices
In early November 2024, OPEC+ announced extending voluntary production cuts until December 2024, setting a maximum daily production cap at approximately 2.2 million barrels. This move is intended to support oil prices, although recent market fluctuations—exacerbated by the U.S. election outcome and Trump’s victory—have added complexity to forecasts.
While OPEC+ aims to stabilise oil prices, many analysts suggest prices could face downward pressure in 2025. Some experts predict oil may drop to around $60 per barrel by the year’s end, although much depends on the stability of the Middle Eastern region. A potential escalation in the Israel-Iran conflict could prompt a significant price spike if the energy infrastructure in Iran were impacted.
Brent and WTI: understanding the key oil benchmarks
When discussing oil price forecasts, it’s essential to differentiate between Brent and WTI. Brent crude, primarily produced in the North Sea, is a pricing benchmark for markets across Europe, the Middle East, and Africa. On the other hand, WTI (West Texas Intermediate) is a mix of oils sourced in the United States, representing the American oil market. Both benchmarks are referenced in barrels, with price fluctuations influenced by supply, demand, and geopolitical factors.
Key oil price forecasts for 2025 from major institutions
Financial institutions have issued their oil price forecasts, factoring in complex geopolitical and economic conditions. Here are some of the latest insights:
- Goldman Sachs: Initially forecasting Brent oil prices around $95 per barrel for 2024, Goldman Sachs revised its 2025 forecast downward to an average of $76 per barrel. The recent Israel-Iran tensions haven’t impacted oil prices as expected, leading Goldman to believe these geopolitical factors may not significantly affect 2025 prices.
- JP Morgan: The bank’s outlook is slightly more bearish. It predicts a Brent price of around $75 per barrel at the start of 2025, decreasing to approximately $60 by year-end. This forecast assumes no major geopolitical shocks and a moderate global demand environment.
- Bank of America (BoA): BoA projects Brent prices to remain stable in the second half of 2024, settling around $75 per barrel, with WTI expected to hold steady at $71. BoA’s conservative forecast considers increased output from non-OPEC countries, such as Canada, Brazil, and Argentina, which could add downward pressure to prices.
- Citi: Citi predicts a decline in oil prices in 2025, with an average price target of $60 per barrel. The bank attributes this forecast to Trump’s re-election and the potential for new tariffs, which may prompt OPEC+ producers to ease production restrictions, thereby increasing supply and lowering prices.
Key drivers shaping the oil price forecast for 2025
The following factors are expected to influence oil prices in 2025 significantly:
- OPEC+ production policy
OPEC+’s continued production cuts are a critical stabilising factor for oil prices. However, OPEC+ may adapt its approach to global demand changes or market pressures, which could alter the price trajectory 2025. - Geopolitical tensions in the Middle East
Ongoing conflicts, particularly in the Middle East, create supply risks that could lead to price volatility. An escalation in the Israel-Iran conflict or potential disruptions in energy infrastructure could push prices higher. - U.S. foreign policy under Trump
With Donald Trump’s re-election, potential shifts in U.S. foreign policy towards OPEC+ and Iran may impact global oil supply. Trade tariffs or increased domestic production could alter the global supply-demand balance and affect prices. - Increased Non-OPEC oil supply
Oil production from countries outside of OPEC, such as Canada, Brazil, and Argentina, is expected to grow. This could place downward pressure on prices, particularly if OPEC+ continues its current production cut strategy.
Conclusion: what’s ahead for oil prices in 2025?
In summary, the 2025 oil price forecast suggests a potential decline, with most financial institutions projecting Brent and WTI prices between $60 and $75 per barrel. The market remains sensitive to geopolitical shifts, production policies, and global economic conditions. As OPEC+ and major oil producers navigate these dynamics, oil prices are expected to reflect a balance between stabilisation efforts and increased supply.
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