Oil Prices Forecasted to Decline to $60 per Barrel by 2025, Citi Research Predicts
In a recent report, Citi Research strategists have projected 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 temporary.
The current Brent prices are hovering around $70-72, with markets yet to react to the OPEC+ decision. However, the ongoing situation in Libya could take months to resolve, leading to a strong market surplus next year and pushing prices lower.
Recommendations from Citi Research include selling on a bounce towards $80 Brent, with expectations of prices moving down to the $60 range in 2025 as the surplus grows. Additionally, OPEC+ has postponed its planned production cut unwind to December 2024, aiming to conclude the process by the end of 2025 in response to market weakness and price declines.
Bank of America's Commodities Research team has also revised down its price forecast to $75 per barrel for the second half of 2024 and for 2025, citing concerns about growing global oil inventories. The team highlights weaker demand growth and record OPEC+ spare capacity exceeding 5 million barrels per day as factors dimming the outlook for oil prices.
Overall, the surplus in capacity and slower demand reduce the risk of price spikes from potential geopolitical disruptions, according to BofA strategists. This shift in the oil market landscape could have significant implications for investors and consumers alike, as lower oil prices may lead to changes in energy costs, inflation rates, and overall economic stability. It is crucial for individuals to stay informed about these developments and consider adjusting their financial strategies accordingly.