(BFM Bourse) – Analysts differ somewhat in their forecasts for oil for the current year. But it appears that the upside potential remains limited. The behavior of OPEC+ members will once again be scrutinized, as will the policies of Donald Trump.
The year 2024 was not a milestone for oil. The prices of black gold on the market continued to lag behind the great performances of the stock markets.
According to Deutsche Bank, the barrel of North Sea Brent, the major international benchmark for oil, ended 2024 with a decline of 3.1%, marking a second consecutive year of decline. WTI listed in New York, another major contract, fared a little better, finishing a hair in the green (+0.1%).
After a rather promising start to the year, driven in particular by tensions in the Red Sea which had caused fears about supplies, prices then gradually declined until October. They then moved within a restricted price range. Oil has particularly suffered from the deterioration of the economy in China, by far the largest importer of black gold with 11 million barrels of imports per day (in 2023, according to the American Energy Agency). By comparison, oil demand is estimated at around 100 million barrels per day.
What can we expect this year? Unlike American stocks on which there is a clear upward consensus, analysts have more disparate opinions. But, in all cases, the upside potential appears limited.
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What decisions for OPEC+?
Citi is one of the research firms that is pessimistic about black gold prices. Quoted by investing.com, the bank estimates that the barrel of Brent could fall to 60 dollars and remain around this level, due to a production surplus.
One of the major points of attention for the market remains the behavior of OPEC+, which brings together the member countries of the Organization of the Petroleum Exporting Countries (OPEC) and their allies. The risk is that the cartel decides to significantly increase its production.
For the moment, its members are exercising caution. In December, the cartel decided to extend production cuts representing around 2.2 million barrels per day until the end of March, and to then extend their cuts over 18 months (compared to twelve previously). This schedule will, however, depend on market conditions.
However, discipline within the cartel remains fragile. Furthermore, if OPEC+ members can support prices with these production reductions, they take the risk of losing market share, particularly to the profits of American shale oil producers.
“It has become more difficult to make coordinated group-wide quota reductions, with recent reductions either intended to be temporary or non-binding, and market share losses have become significant for ‘core’ countries ‘ of OPEC for the benefit of countries exempt from OPEC”, Deutsche Bank wrote in November.
A surplus this year?
Even without counting on a significant increase in OPEC+ production, Bank of America sees oil falling significantly this year. The American bank anticipates a barrel of Brent at $65 on average in 2025 (compared to $79 on Friday after the European close) because it estimates that non-OPEC+ countries (United States, Brazil, Canada, Guyana) will increase their production of 1.4 million barrels per day this year.
OPEC+, according to the American bank, would have little room to increase its volumes. “While they look forward to increasing production today, we believe the group’s production will likely remain under control throughout 2025 due to accelerating non-OPEC supply growth and sluggish growth in oil demand,” Bank of America wrote at the end of November.
Growth in demand would indeed remain quite “weak”, predicts Bank of America. Which would create a surplus on the market of 800,000 barrels per day. A figure quite close to the estimates of energy brokers Gunvor and Trafigura who anticipate supply exceeding demand by a little less than a million barrels per day in 2025, according to Bloomberg.
Goldman Sachs estimates that Brent will trade on average around $76 per barrel over the year, a little less than its current level. The American bank is also counting on a surplus, but limited to 400,000 barrels per day in 2025.
UBS is more optimistic than its peers. Unlike other establishments, it believes that the market should be generally in balance between supply and demand.
“Some market participants believe the oil market was already in surplus in 2024, but as visible global oil inventories have declined this year, this suggests the market is in deficit,” she says. The Swiss bank judges that the production increases of OPEC+ members anticipated by certain operators are too high. Furthermore, she does not count on increases from OPEC+.
The establishment also warns that demand could be driven by a favorable base effect on weather conditions at the start of the year (winter had been mild in the first quarter of 2024) as well as by fiscal and monetary stimulus measures.
All of these elements lead UBS to expect Brent to reach $80 per barrel this year.
Trump as major uncertainty
As with many asset classes, the policies of Donald Trump, who will return to the White House on January 20, and their implications for oil remain an open question. UBS provides Normand’s response, judging that Trump could have both upward and downward consequences on oil prices.
On the one hand, pressure or even sanctions on producing countries like Iran or Venezuela could push prices up.
On Friday, oil prices rose because the United States took sanctions against Russia’s “ghost fleet”, which transports 1.7 million barrels per day. This should lead China and India to look for alternatives to Russian oil and would thus create tensions on supply.
On the other hand, Donald Trump’s desire to implement customs tariffs could weaken global growth prospects and therefore, in turn, oil demand.
As for his ambition to promote production, with his famous “drill baby, drill” (“drill my heart, drill”), “we continue to think that it is not the person who sits in the White House who determines the “evolution of crude production in the United States, but the current spot price”, writes the Swiss bank. However, investors have put pressure on the oil majors in recent years to demonstrate discipline on profitability, notes UBS. And therefore avoid drilling at all costs.
Julien Marion – ©2025 BFM Bourse
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