Oil prices could drop significantly, possibly reaching as low as $40 per barrel in 2025, if OPEC+ reverses its current output cuts, according to market analysts who foresee a challenging period ahead for crude. Tom Kloza, OPIS’ global head of energy analysis, notes that concerns over 2025 oil prices are more pronounced than in recent years. A complete unwinding of OPEC+ cuts could result in a steep price drop due to rising supply without matching demand, Kloza stated.
Currently, global oil prices remain stable, with Brent crude trading at around $72 per barrel and U.S. West Texas Intermediate at approximately $68. However, Henning Gloystein from Eurasia Group anticipates that if OPEC+ fully reverts to pre-cut production levels, crude prices could indeed fall sharply, especially given expectations of only modest demand growth of about 1 million barrels per day next year. Saul Kavonic, senior energy analyst at MST Marquee, echoed this, suggesting that a sudden lift of cuts might trigger a price war over market share, pushing prices down to levels seen during the COVID-19 pandemic.
OPEC+ has been maintaining voluntary production cuts to stabilize prices, with a recent extension of these cuts. In September, the group delayed its plan to reduce the 2.2 million barrels per day voluntary cuts until December, aiming to prevent further price declines amid tepid demand from China, the world’s second-largest oil consumer. Additionally, OPEC lowered its 2025 demand growth forecast to 1.5 million barrels per day, acknowledging slower-than-expected economic recovery and oversupply risks due to increased output from non-OPEC producers like the U.S., Canada, Guyana, and Brazil.
Despite this, market analysts predict an overall bearish trend for oil next year, with a potential build-up in oil inventories. Citibank’s Martoccia Francesco highlighted that the oil surplus could reach 1.6 million barrels per day if OPEC+ adheres to its current plan. Citi’s forecast suggests Brent crude prices may average $60 per barrel in 2024.
Adding to the uncertainty, U.S. President-elect Donald Trump’s administration could influence global oil markets. Trump’s “drill baby drill” energy policy, aimed at boosting U.S. oil production and reducing energy prices, may further pressure global oil prices. Analysts suggest that if Trump pushes for lower retail gasoline prices, oil prices would need to drop to $40 or below to meet that goal. Current gasoline prices, however, remain favorable for both consumers and producers, with the national average around $3 per gallon, noted Matt Smith, lead oil analyst at Kpler.