Over the past four years, oil prices have experienced dramatic fluctuations, ranging from a sharp decline during the COVID-19 pandemic to a significant increase triggered by the Russia-Ukraine conflict. In 2025, experts predict a drop in oil prices due to oversupply and slowing demand growth. This situation could lead to high inflation, increased consumer debt, and political instability.
Changes in Oil Prices: Variations Highlight Market Dynamics
Furthermore, the risk of conflict in the Middle East - particularly between Israel and Iran - remains a major concern, as the situation in Syria shows no signs of de-escalating. At the same time, China’s economic slowdown, as the world's second-largest oil consumer, adds to the uncertainty.
This article provides an in-depth analysis of key factors and expert forecasts, offering insights into the future of the oil market.
1. Fears of Oil Oversupply in 2025
The oil market is projected to face a supply glut in 2025, with the average Brent crude oil price expected to fall to $71.61 per barrel, down from $82.50 per barrel in 2024. The primary drivers of this decline are China's sluggish economic growth and the global shift toward renewable energy. Although OPEC+ plans to increase production starting in December, oil prices remain under significant pressure.
In the United States, the Trump administration has pledged to boost oil production by 3 million barrels per day through preferential policies. However, experts like Exxon CEO Liam Mallon argue that this plan is unlikely to succeed due to its lack of economic feasibility. U.S. operators tend to prioritize strategies that keep supply low to maintain high prices, thereby optimizing profits.
In the long term, the Trump administration’s support for the oil industry - such as lifting restrictions on Liquefied Natural Gas (LNG) exports and investing in infrastructure - could prove more economically advantageous. However, increased production risks further price declines. While lower energy costs may benefit consumers and businesses by easing inflationary pressures, they could also challenge the profitability of the oil industry.
2. China’s Alarming Decline in Oil Demand
Crude oil price forecasts for 2025 continue to trend downward amid concerns about slowing demand, particularly in China. The EIA has revised its average Brent crude price forecast from $78 per barrel in October to $74 per barrel in November, with a further decline anticipated in the second half of 2025. The primary factors include weak demand from China due to slowing industrial growth, the rise of electric vehicles, and the increased use of liquefied natural gas (LNG) trucks.
Despite this, global oil demand is expected to see a slight increase, driven primarily by India, which is projected to account for 25% of the growth in global consumption between 2024 and 2025. The EIA forecasts a rise in oil consumption by 1.2 million barrels per day in 2025.
JP Morgan and the World Bank both predict an oil supply surplus, with the average Brent price potentially dropping to $73 per barrel, or even as low as $60 per barrel, by the end of 2025. Experts attribute this trend to a long-term deceleration in demand growth, particularly in China.
3. Oil Prices Could Plunge to $40 a Barrel by 2025, Experts Warn of Major Shift
The November forecast warns that oil prices could drop to $30–$40 per barrel by 2025 if OPEC+ fails to control production amidst pressure from declining market share. Tom Kloza (OPIS) suggests that oil prices are unlikely to rise in the short term, despite the U.S. increasing output from the Gulf of Mexico and OPEC+ maintaining an excess capacity of 6 million barrels per day.
Meanwhile, U.S. producers continue to adhere to disciplined production strategies, while the Trump administration’s energy policies face challenges from the downward pressure on oil prices.
4. The Sanctions' Grip: How Will They Shape Oil Prices?
Oil Refinery, A Key Highlight in the Global Energy Supply Chain
The rise of Donald Trump in the U.S. has sparked concerns about the impact of sanctions on the oil market. While Trump has expressed intentions to improve relations with Saudi Arabia and Russia, he may impose stricter sanctions on Iran and Venezuela, potentially disrupting oil supplies, particularly from Iran.
Tim Callen (AGSIW) suggests that OPEC+ has the capacity to intervene and offset any shortfall caused by sanctions. However, without such measures, OPEC+'s ability to increase production in 2025 could be significantly constrained.
Moreover, Trump is reportedly considering new sanctions on Iraq, which could heavily impact China and India. According to S&P Global, over 70% of oil and gas projects in Iraq are currently managed by Chinese companies, heightening the risk of energy supply disruptions for these countries.
5. 2025 Oil Prices: The Trends and Surprises Ahead
Brent crude oil prices are projected to average between $71 and $78 per barrel in 2025. However, the outlook remains uncertain, with a potential drop to as low as $40 per barrel in a worst-case scenario. Key factors driving this uncertainty include the risk of oversupply, declining oil demand in China, and the global transition to renewable energy.
The Trump administration has outlined plans to boost U.S. oil production by expanding licensing and heavily investing in infrastructure. However, the effectiveness of these policies remains uncertain, as energy companies continue to prioritize shareholder returns over increasing output.
While low oil prices can reduce costs, benefiting consumers and businesses by easing inflationary pressures, producers face the challenge of navigating market fluctuations while maintaining profitability.
Analysts largely agree that oil prices are likely to decline. However, they expect producers to intervene, aiming to mitigate sharp price drops and ensure the long-term sustainability of operations.
