Oil News: Crude Prices Set to Drop in 2025 – How Low is Too Low?

How Low Could Crude Oil Prices Go in 2025? Forecasts Vary

Crude oil prices are expected to face headwinds in 2025, with analysts largely projecting a bearish market due to rising non-OPEC+ production and tepid demand growth. While most forecasts agree on a well-supplied market, the extent of the downside risk varies. Some analysts anticipate Brent crude stabilizing in the low $70s, while others warn of a potential collapse below $50 per barrel if economic conditions deteriorate significantly.

ING and IEA See Limited Impact from OPEC+ Cut Delays

OPEC+ decided in December to delay easing its 2.2 million bpd production cuts until April 2025, a move that could temper supply growth. Despite this, ING strategists Warren Patterson and Ewa Manthey argue that non-OPEC+ supply, driven by the U.S., Brazil, and Guyana, will keep the market in surplus. The IEA forecasts a 950,000 bpd supply overhang even if OPEC+ maintains current production levels throughout 2025. If cuts begin to unwind in April, the surplus could rise to 1.4 million bpd.

Most analysts, including ING and the IEA, expect Brent crude to average around $74 per barrel next year, reflecting the belief that demand growth of 1.1 million bpd will not fully offset rising production. The EIA similarly forecasts an annual average of $74, with prices sliding to $72 by the fourth quarter as inventories build.

OPIS and Zacks Warn of Potential Oil Price Collapse Below $50

While the consensus favors a bearish outlook, some analysts foresee steeper declines under specific conditions. Tom Kloza, global head of energy analysis at OPIS, warns of a potential price collapse to below $50 per barrel if a “perfect storm” emerges. This could include a sharp economic slowdown in China and Europe, escalating trade tensions, and higher U.S. output. Kloza highlights OPEC’s spare capacity as a risk factor, describing it as a “coiled spring” that could unleash additional supply.

Similarly, Zacks Investment’s Brian Mulberry suggests that sudden economic contractions in major economies could significantly erode demand, pushing prices below $50. He views OPEC’s capacity and the possibility of U.S. shale growth as compounding factors. However, Mulberry emphasizes that this is a downside risk scenario rather than the central forecast.

Reuters Poll Suggests Brent Stability Around $74 in 2025

By contrast, investment banks maintain a more measured outlook. A Reuters survey of 41 analysts pegs Brent crude at an average of $74.53 per barrel in 2025, reflecting expectations that modest demand and steady supply growth will keep prices contained. Saxo Bank points to Chinese stimulus as a potential stabilizing factor, though analysts caution that U.S.-China trade tensions could offset these gains.

Key Takeaways for Traders

While most analysts foresee a bearish market, the degree of downside risk varies. The base case for 2025 suggests Brent crude trading in the low $70s, but traders should remain alert to economic and geopolitical developments that could trigger sharper declines.

More Information in our Economic Calendar.