Oil prices are expected to average between $70 and $75 per barrel in 2025, down from $80 in 2024, as analysts foresee a global supply surplus and slowing demand from major economies like China.

According to The National, the International Energy Agency (IEA) predicts a significant oversupply of up to 1.4 million barrels per day (bpd) if Opec+ eases its production cuts by March. UBS, however, expects only a modest surplus of 100,000 bpd, with Brent crude likely averaging $80 per barrel.

In December, Opec+ extended its voluntary output cuts of 2.2 million bpd until the end of March 2025. Analysts believe the group could extend these cuts further if necessary to stabilize the market, despite concerns over losing market share to non-Opec+ producers.

US President-elect Donald Trump’s plans to impose strict tariffs and tighten sanctions on Iran may also shape the market. Trump aims to restrict Iran’s oil exports as part of his “maximum pressure” campaign, potentially disrupting supply. Meanwhile, analysts suggest his policies on domestic oil drilling may have limited immediate impact due to market conditions and industry consolidation.

China’s economic slowdown and growing adoption of electric vehicles have softened demand for crude oil. While stimulus measures from Beijing may provide limited support, the IEA forecasts global oil demand to grow by 1.1 million bpd in 2025, driven mainly by emerging Asian economies.

Non-Opec+ producers like the US, Brazil, and Canada are boosting output, with the US set to increase production to 13.5 million bpd this year. The Energy Information Administration (EIA) predicts a balanced oil market in 2025, with Brent crude prices averaging $74 per barrel.

Geopolitical tensions, such as conflicts in the Middle East, have eased their impact on oil prices due to Opec’s spare production capacity of over 5 million bpd, providing a buffer against major disruptions. With rising supply and uncertain demand, oil prices are expected to remain under pressure throughout the year.