Oil prices likely to be lower in 2025 than last year

Brent crude oil prices are projected to average $73 per barrel in 2025, down $7 per barrel per barrel from 2024, according to Wood Mackenzie’s latest monthly oil market outlook. The $73 per barrel forecast for this year is revised down $0.40 per barrel from the early February monthly report.

The outlook is primarily shaped by two factors: OPEC+ production plans and US tariff policies.

Ann-Louise Hittle, Vice President of Oils Research at Wood Mackenzie, states, "We’re seeing a complex interplay of supply and demand factors. While global demand is expected to increase by 1.1 million barrels per day in 2025, non-OPEC production is forecasted to rise by 1.4 million barrels per day, potentially outpacing demand growth."

Key points from the forecast include:

1. OPEC+ plans to increase production in small monthly increments from April 2025 through September 2026. Postponing this plan would support prices and could offset the impact of additional US tariffs.
2. Global economic growth for 2025 is projected at 2.8%, but this could be adjusted downward by around 0.5 percentage points depending on potential trade war scenarios.
3. Slower GDP growth could reduce the oil demand increase in 2025 by about 0.4 million barrels per day.
4. The annual average for Brent crude could be $3 to $5 per barrel lower if oil demand growth weakens.

Wood Mackenzie emphasizes that these projections are subject to change based on global economic conditions, tariff and trade policies, and OPEC+ decisions.

“Slower GDP growth would put the demand gain in 2025 about 0.4 million b/d less than the current projection for the year,” said Hittle. “The resulting 0.7 million b/d year-on-year gain would be surpassed to a greater degree by the increase in non-OPEC supply, the majority of which is from conventional projects, so largely independent to oil price. This risk would leave little room for OPEC+ to pursue its plan to bring output back into the market.”