- Oil markets will face another year of a soft demand in 2025 as major economies record weaker headline growth and structural factors like a growing electric vehicle fleet eat into demand.
- OPEC+ has run out of room to add barrels back to the market with limited price impact as demand ebbs and non-OPEC+ supply continues to grow.
- OPEC+ members are likely to doubt the effectiveness of restraining production if it means market share is eroded with no parallel support for prices.
- Oil markets will swing into a surplus in 2025 even if OPEC+ were to delay returning output.
- We expect oil prices will decline on average in 2025. We target Brent futures at an average of USD 73/b and WTI at an average of USD 71/b, down roughly 9% and 7% year/year respectively.
- A disorderly end to the Declaration of Cooperation (OPEC+ production management) would mean substantial downside risk for prices if producers fought for market share.
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Edward Bell
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