Analysts say oil prices may plummet by 40% in 2025 if OPEC+ rolls back its voluntary production cuts, a development that could bring oil prices crashing down to as low as $40 per barrel. This is because Brent crude, the global benchmark, traded recently at $72 per barrel, while WTI futures are around $68.
Tom Kloza, global head of energy analysis at OPIS, said the long-term growing concern over next year’s oil market was being expressed; fears over prices for 2025 are some of the most intense since the Arab Spring. A full unwinding of OPEC+ production cuts could push prices as low as $30 or $40 per barrel, as shown by that cartel’s market share shrinkage over time.
In terms of outlook, this market is particularly bearish in 2025, with weak oil demand growth set to increase at a meagre 1 million barrels per day, alongside a risk of oversupply. According to Eurasia Group head of energy Henning Gloystein, any abrupt reversal of Opec+ cuts could still lead to a “price war” between producers, much like the market upheaval from Covid-19 last year. Similarly, Saul Kavonic, a senior energy analyst at MST Marquee, said that OPEC+ could inadvertently set off a price collapse if it disregards demand forecasts.
Despite these concerns, analysts expect the alliance to opt for a gradual easing of production cuts rather than an immediate and full unwind. In recent months, OPEC+ has shown caution, delaying planned increases in output to support market stability. For example, in September, the group extended its voluntary cuts through December to prevent further price declines.
Apart from supply adjustments, the market also feels weighed down by slower-than-expected post-pandemic recovery in demand from China: the world’s second-largest oil consumer. Recently, OPEC trimmed its global oil demand growth forecast for 2025, further adding to bearish sentiment. A couple of key non-OPEC producers, including the U.S. and Brazil, are perceived as set to increase supply, building pressure on prices.
Citibank’s Martoccia Francesco warned that if OPEC+ proceeds with its current production plans, the surplus could grow substantially, potentially reaching 1.6 million barrels per day. Even without a full unwind, Citi analysts project a Brent price average of $60 per barrel for 2025. The outlook could worsen if geopolitical factors, such as a potential trade war under a new U.S. administration, contribute to further price declines.
