Oil Prices Predicted to Fall in 2025 Due to Excess Supply

Analysts at Citi Research forecast a decline in oil prices next year, citing an excess supply in the market. The average price of Brent is expected to be $60 per barrel in 2025.

The oil market is anticipated to face an excess supply of approximately 1 million barrels per day (b/d) in 2025, even if OPEC+ maintains its current production restrictions. This surplus is likely to put downward pressure on oil prices.

OPEC+ Production Strategy

OPEC+ is expected to focus on meeting existing quotas, avoiding difficult decisions about changing course, such as increasing or cutting production further. This approach is likely to contribute to the excess supply in the market.

Earlier this month, OPEC+ delayed the partial lifting of production restrictions planned for October until December. This move is seen as an attempt to manage the supply glut and stabilize oil prices.

Oil Demand and Non-OPEC Production

Growth in oil demand next year is forecast to be less than 900,000 barrels a day, which is expected to be easily covered by an increase in production from non-OPEC countries. If OPEC+ lifts production restrictions, it will lead to more excess oil in the market.

Short-Term Price Outlook

Citi analysts predict that Brent will trade above $70 per barrel in the near future due to the loss of oil supplies from Libya and Russia’s stricter compliance with OPEC+ quotas.

Additionally, oil demand in China is expected to increase by 300 thousand barrels per day in the fourth quarter, compared to the same period last year. This growth is attributed to a decline in oil demand in the previous two quarters.

Current Market Prices

As of 17:30, the November futures cost for Brent on the London ICE Futures exchange was $73.21 per barrel, while the cost of contracts for WTI oil for October on the New York Mercantile Exchange (NYMEX) was $70.39 per barrel.