Analysts lower oil forecasts due to supply increase, reaching $70
Barclays has reduced its projection for Brent Crude prices due to a decreased demand growth forecast of 500,000 barrels per day. The expectation is that the price of oil will remain relatively flat this year, with analysts and investment banks foreseeing an average price in the low $70s. The complications surrounding global economic uncertainty, particularly triggered by tariff wars, have cast a shadow of apprehension on this year’s oil demand prospects. Moreover, the recent decision by OPEC+ to reintroduce oil barrels into the market has raised concerns about the equilibrium in the supply and demand dynamics.
Given the evolving political landscape under President Donald Trump’s administration, experts are advising that oil prices this year are likely to fall short compared to the previous year. The uncertainties stemming from the trade war and tariff negotiations have added further complexity to forecasted oil demand growth, prompting key players to adjust their projections. In response to the surge in crude supply, OPEC’s decision signifies a shift towards an excess supply environment, prompting an adjustment to market expectations.
Wall Street analysts have revised their forecasts in light of the changing dynamics. Goldman Sachs recently recalibrated its year-end prediction for Brent Crude prices, accounting for dampened economic growth in the United States and the expected increase in OPEC’s supply output. The bank’s research team highlighted the impact of Trump’s trade policies on the market volatility, amplifying concerns about a potential downfall in oil prices. The lingering tariff uncertainties, coupled with surplus production capacity among OPEC members, have formed a cloud of skepticism over the medium-term outlook for oil prices.
Similarly, Barclays and HSBC also reevaluated their projections, considering the mounting economic uncertainties caused by geopolitical tensions. The UK-based bank, Barclays, diminished its global demand growth forecast by 510,000 barrels per day, citing soft high-frequency indicators and prevailing economic ambiguity as the primary factors undermining demand growth prospects. Consequently, this year’s demand growth is now expected to be approximately 900,000 barrels per day. On the supply side, Wood Mackenzie anticipates a surge in U.S. crude oil production by the end of the year, albeit at a rate slower than initially anticipated.
Wood Mackenzie also revised its price expectations downwards, projecting Brent Crude prices to average $73 per barrel in 2025, a decrease of $7 from the previous year. Their forecast attributes this decline to the looming mismatch between supply and demand dynamics, with non-OPEC production anticipated to outpace demand growth. Amidst these revisited forecasts, the global oil market is facing a delicate balance of supply challenges, dominated by myriad factors such as OPEC’s supply decisions, U.S. trade policies’ economic ramifications, and geopolitical tensions globally.
Looking ahead, the interplay of OPEC’s future supply decisions, influenced by geopolitical dynamics and uncertainty over trade policies, will be the key determinants shaping oil prices this year. Wood Mackenzie has underscored the significance of these factors as they seem poised to have a significant impact on oil market dynamics in the coming months. While economic projections appear optimistic at a growth rate of 2.8% for 2025, the looming geopolitical and economic uncertainties could trigger further adjustments, significantly influencing global oil prices throughout the year.
