Oil Price Forecast

Investing.com reports that oil prices are set to decline by 10% in 2025, hindered by supply growth eclipsing demand, according to analysts at BofA.

Crude Oil WTI Futures are anticipated to average $61 per barrel, while WisdomTree Brent Crude Oil (LON:BRNT) is expected at $65 per barrel, both showing a drop of over 10% from current prices.

Key factors behind this bearish perspective include a rise in non-OPEC supply and sluggish global economic growth, leading to a projected surplus in 2025.

Supply is forecasted to increase by 1.4 million barrels per day, primarily from non-OPEC+ nations like the U.S., Argentina, Brazil, and Guyana. Conversely, demand is expected to rise by only 0.8 million barrels per day amid a global GDP growth of 3.3%.

Analysts assert, "Given the oversupply narrative for 2025, it is hard to build a bullish case for oil prices," and suggest that OPEC+ will likely uphold voluntary production cuts unless demand exceeds expectations or supply disruptions occur.

Despite the potential price drop, energy producers are expected to remain stable due to their strong balance sheets and disciplined capital expenditures.

While caution is advised for the energy sector as 2025 approaches, the anticipated decline in oil prices may offer compelling buying opportunities later in the year.

The analysts express confidence in the industry's financial stability, stating, "[T]hough we expect weaker fundamentals, we are not worried about the financial viability of the industry and do not foresee a wave of downgrades if oil prices end up lower than our forecasts."