Oil Prices Could Decline to $60 by 2025, Citi Research Says
In a recent report, Citi Research strategists have predicted that oil prices could drop to around $60 per barrel by 2025 due to a significant market surplus. Despite short-term support from supply disruptions in Libya and delayed production cuts by OPEC+, Citi believes that these factors are only offering temporary relief.
While the market has not yet reacted to the OPEC+ decision, Citi warns that the situation in Libya could take months to resolve, leading to a strong market surplus next year. The strategists recommend selling on any bounce towards $80 Brent, as they anticipate prices moving down to the $60 range in 2025.
Additionally, Bank of America's Commodities Research team has revised its price forecast to $75 per barrel for the second half of 2024 and for 2025, down from their previous estimates. Concerns about growing global oil inventories, weaker demand growth, and record OPEC+ spare capacity exceeding 5 million barrels per day have all contributed to the downward revision.
In summary, the outlook for oil prices is expected to trend lower in the coming years due to a surplus in capacity and slower demand growth. This could reduce the risk of price spikes from geopolitical disruptions and have implications for both investors and consumers. It's important to stay informed about these developments and adjust investment strategies accordingly to mitigate risks and capitalize on potential opportunities in the energy market.