Crude oil outlook for 2025: Another bearish year ahead

After a second yearly decline in 2024, many analysts have revised their 2025 oil price forecasts downward, citing increased supply and weaker demand growth as key factors. However, geopolitical tensions remain an upside risk, potentially driving prices higher in early 2025 despite the overall bearish outlook.

October-November: A period of extreme market volatility

Global oil benchmarks experienced heightened volatility in October and November. Prices initially fell in late October but rebounded in early November due to uncertainties surrounding U.S. elections and OPEC’s decision to delay a planned output hike for December. Nonetheless, these gains were limited by a stronger dollar, which weighed on market sentiment.

Later in November, oil prices saw some recovery, driven by the escalating Russia-Ukraine conflict.

2025 projections suggest further declines

According to ChemOrbis Price Wizard, year-to-date averages stand at $80.3/bbl for Brent and $76.3/bbl for WTI, displaying a more than $1/bbl decrease from 2023. Following the peaks in 2022, 2024 is prone to be the second consecutive year for average oil prices to show decline. All eyes are now on the estimates for 2025, all of which suggest decreases for another year.

Banks, consultant firms as well as agencies making oil price forecasts offer a variety of scenarios with some of them sounding relatively less bearish while there are also others prioritizing risks and being more bearish.

Less bearish projections: Brent to average $76-80

Goldman Sachs lowered its 2025 Brent oil price forecast to $76/barrel, down from $77/barrel in August and $82/barrel earlier this year. The bank sees short-term upside risks, with Brent potentially reaching the mid-$80s in H1 2025 if Iranian supply drops by 1 million barrels/day due to stricter sanctions. However, medium-term risks are tilted downward due to high spare production capacity.

Additionally, the Energy Information Administration (EIA) adjusted its projections for Brent and WTI crude oil prices. Accordingly, 2025 estimates were cut by almost $2/barrel to $76.06/barrel for Brent and $71.60/barrel for WTI.

Standing well above others, UBS revised its outlook for Brent crude prices in 2025, lowering its target to $80/barrel from $85/barrel set in September. Despite this downgrade, the investment bank expressed optimism about a potential price rebound. UBS also acknowledged risks posed by tariffs but suggested fiscal stimulus could help mitigate the economic impact.

More bearish estimates: Brent will go under $70 or even $60

J.P. Morgan revised its 2025 Brent oil forecast to an average of $73/barrel, a decrease from its previous estimate of $75/barrel in May. The bank also projected that prices could end the year below $70/barrel. Similarly, the bank lowered its WTI NYMEX forecast to $64/barrel, down from earlier projections of $71/barrel.

Citi analysts have forecast that Brent crude will average $60/barrel in 2025, largely driven by the energy policies of the incoming U.S. administration, as well as heightened import tariffs and increased oil production. Moreover, the bank expects Brent to average $65/barrel in the first quarter, $60/barrel in the second quarter, and $55/barrel in the fourth quarter of 2025.

A collapse to around $40 is also within possibilities

The most bearish scenario for oil prices comes from a group of analysts talking to CNBC on November 12. Brent may get down to $30 or $40 a barrel if OPEC+ lifts its voluntary production cuts. If the producers’ group, who has been diligently upholding voluntary output cuts for years, implements their production plan, the market surplus could nearly double, and a price plunge may ensue. However, the analysts argue that the alliance is expected to favor a phased approach to unwinding early next year, rather than opting for an immediate and complete reversal.

In September, the group delayed the rollback of its 2.2 million barrels per day voluntary cuts by two months to stabilize oil prices. In early November, they again decided to delay the planned oil output increase by another month to the end of December.

Considering that the global demand growth projections of OPEC+ have also been revised downwards for the past four months after having been kept stable for the first seven months of the year, these delays in planned output increase is not surprising.

Additionally, now that Trump will be back in the office next year, a possible trade war will definitely weigh more on global oil demand. He also vowed to cut energy costs in half within 12 months by encouraging more drilling, dramatically increasing energy production, generation and supply. Nevertheless, many analysts find this move unreasonable and unrealistic as this will result in drastic price declines and unprofitable margins for producers.