Oil prices to drop in 2025 compared to 2024

The US$73/bbl forecast for 2025 is revised down US$0.40/bbl from the early February monthly report.

The outlook is primarily shaped by two factors: OPEC+ production plans and US tariff policies.

Ann-Louise Hittle, Vice President of Oils Research at Wood Mackenzie, stated: "We’re seeing a complex interplay of supply and demand factors. While global demand is expected to increase by 1.1 million bpd in 2025, non-OPEC production is forecasted to rise by 1.4 million bpd, potentially outpacing demand growth."

Key points from the forecast include:

1. OPEC+ plans to increase production in small monthly increments from April 2025 through September 2026.
Postponing this plan would support prices and could offset the impact of additional US tariffs.
2. Global economic growth for 2025 is projected at 2.8%, but this could be adjusted downward by around 0.5% depending on potential trade war scenarios.
3. Slower GDP growth could reduce the oil demand increase in 2025 by about 0.4 million bpd.
4. The annual average for Brent crude could be US$3 to US$5/bbl lower if oil demand growth weakens.

Wood Mackenzie emphasised that these projections are subject to change based on global economic conditions, tariff and trade policies, and OPEC+ decisions.

“Slower GDP growth would put the demand gain in 2025 about 0.4 million bpd less than the current projection for the year,” said Hittle. “The resulting 0.7 million bpd year-on-year gain would be surpassed to a greater degree by the increase in non-OPEC supply, the majority of which is from conventional projects, so largely independent to oil price. This risk would leave little room for OPEC+ to pursue its plan to bring output back into the market.”

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