Oil Prices Projected to Fall in 2025, Benefiting Trump's Economic Agenda
Despite President Trump's promises to lower energy costs by easing oil and gas drilling regulations, industry experts predict that oil prices will decline in 2025 due to various factors.
Reduced Supply Constraints
US oil production is near peak levels, accounting for a significant share of the global market. Executive orders expected from the Trump administration aim to further lift restrictions on offshore drilling and federal land exploration.
OPEC+ Production Capacity
The oil alliance OPEC+ maintains spare production capacity, indicating potential market share recapture from self-imposed output cuts. Additionally, slowing demand growth in China as the country transitions to electric vehicles is expected to dampen price increases.
Analyst Predictions
Analysts at Goldman Sachs, JPMorgan, and Bank of America forecast a decline in Brent crude oil prices from around $80 per barrel in 2024 to between $73-$65 per barrel in 2025.
Gasoline Price Trends
The Energy Information Administration projects an average gasoline price of $3.20 per gallon in 2025, a further reduction from 2024's levels. This follows a $0.20 per gallon decrease from 2023 to 2024.
Political Implications
Trump's promise to lower energy costs for Americans could provide an early victory for his presidency. However, analysts caution that gasoline prices may not fall as drastically as promised during his campaign.
Wildcards
The implementation of sanctions against oil producers Venezuela and Iran remains a potential wildcard that could influence oil prices. Production declines in these countries could lead to price increases.