Investinf.com -- BofA Securities projects that Brent crude oil prices will average $65 per barrel, while West Texas Intermediate (WTI) crude oil is expected to average $61 per barrel in 2025.
This forecast is anchored in a detailed analysis of the oil market’s supply-demand dynamics, as outlined in their latest energy outlook.
The analysts flagged a modest increase in global oil demand by 1.1 million barrels per day (b/d) next year.
However, this is overshadowed by a more robust increase in non-OPEC+ supply, which is projected to rise by 1.4 million b/d.
This mismatch is expected to create a surplus of 800,000 b/d in 2025, exerting downward pressure on prices.
The forecast also considers OPEC+'s readiness to reinstate 2.2 million b/d of supply should market conditions warrant, though this adds further uncertainty.
The note identifies several risks that could influence price trends. On the downside, the possibility of a global trade war or an OPEC+ price war looms large, potentially driving prices below forecast levels.
On the upside, geopolitical tensions, particularly in the Middle East and Eastern Europe, along with tighter enforcement of U.S. sanctions on countries like Iran, could lead to price spikes.
Additionally, monetary or fiscal easing in major economies could stimulate demand, mitigating some of the expected price pressures.
BofA analysts also emphasize the structural floor for oil prices, which they place at about $60 per barrel for Brent, reflecting elevated production costs for alternatives like Chinese coal and European gas. This dynamic could stabilize prices despite the projected market surplus.
Refined product markets, such as gasoline and diesel, are also expected to face downward pressures, with rising refining capacity and soft demand contributing to weak margins.
The analysts suggests that these market conditions are likely to persist throughout 2025, barring significant geopolitical disruptions or unexpected demand shifts.