Oil Price Forecast by Citi Research

Investing.com — Strategists at Citi Research predict that oil prices could decline to around $60 per barrel by 2025, attributing this to a significant market surplus.

Although recent supply disruptions in Libya and a delayed production cut unwinding by OPEC+ have provided short-term support for Brent prices in the $70-72 range, Citi believes this stability is temporary.

“At the time of writing, markets have not reacted to the OPEC+ decision, with Brent remaining flat compared to the 4 September close. Nonetheless, the situation in Libya may take months to resolve,” strategists noted.

They anticipate a strong market surplus in the upcoming year, which would further lower prices.

“We recommend selling on a bounce toward ~$80 Brent, as we foresee moves down to the $60 range by 2025 when the sizable market surplus materializes,” the note states.

OPEC+ has postponed the start of its planned production cut unwind from October 2024 to December 2024, with the process expected to conclude by the end of 2025. This shift is in response to recent market weakness and price declines, despite ongoing disruptions in Libyan oil supplies and economic concerns in the U.S. and China.

On another note, Bank of America’s Commodities Research team has revised its Brent oil price forecast for the second half of 2024 down to $75 per barrel, reduced from nearly $90, and for 2025, cut from $80.

They cite concerns about rising global oil inventories, even as they assume OPEC+ will delay planned production increases. The combination of weaker demand growth and record OPEC+ spare capacity exceeding 5 million barrels per day has dimmed the outlook for oil prices.

“In effect, we now see Brent oil prices adjusting from the top toward the middle of our unchanged $60-80/bbl medium-term range faster than previously indicated,” BofA strategists stated. This excess capacity, along with slowing demand, also mitigates the risk of price spikes from potential geopolitical disruptions.