(Oil Price) – Oil demand growth next year is likely to be in line with this year’s tepid increase and the slower pace of growth compared to 2022 and 2023 would result in oil prices averaging $70 per barrel in 2025, Fitch Ratings said on Wednesday.
This year, oil prices have averaged about $80 per barrel.
“Fitch expects oil prices to decrease to USD70/bbl in 2025 from an average of USD80/bbl in 2024, due to moderating demand growth and higher production from non-OPEC+ countries, leading to oversupply,” the rating agency said in a report.
Geopolitical tensions present upside risks to oil prices, but the large spare production capacity at OPEC+ and the group’s ability to manage supply could mitigate and ease upward price pressure, Fitch said.
In early December, OPEC+ decided to delay the start of the easing of the 2.2 million bpd cuts to April 2025, from January 2025. The group also extended the period in which it would unwind all these cuts into the following year, until September 2026.
Due to the OPEC+ decision, next year’s surplus may not be as large as previously feared, but a surplus we will see, analysts say.
The oil market will find itself in a large surplus next year, the International Energy Agency (IEA) said in its monthly report last week.
Even if OPEC+ keeps its oil production as-is for the whole of 2025, there would still be a surplus in supply of 950,000 barrels per day (bpd) next year.
If OPEC+ does begin unwinding the voluntary cuts from the end of March 2025, this glut would swell to 1.4 million bpd, the agency said in its Oil Market Report for December.
Next year, global oil demand is set to grow by 1.1 million bpd, lifting consumption to 103.9 million bpd, the agency said.
However, supply is set to outstrip demand. Total oil supply is on track to rise by 1.9 million bpd in 2025, to 104.8 million bpd, even in the absence of the unwinding of OPEC+ cuts, according to the IEA.
By Tsvetana Paraskova for Oilprice.com
