Oil Prices Poised to Decline in 2025, Providing Potential Early Economic Win for Trump
Key Points:
* Donald Trump plans to loosen regulations on oil and gas drilling to boost energy supply and lower costs for consumers.
* Oil prices are expected to fall in 2025, driven by high US production, OPEC+ spare capacity, and slowing demand growth in China.
* Gasoline prices are also projected to decrease for the third consecutive year, averaging $3.20 per gallon.
Analysis:
US oil production has reached near-peak levels, accounting for approximately 20% of global supply. President-elect Trump has signaled his intention to unwind Biden administration restrictions on offshore drilling and federal lands.
Analysts anticipate that oil alliance OPEC+ will increase production to regain market share lost due to self-imposed output cuts. Slowing demand growth in China, as the country transitions to electric vehicles, will further suppress prices.
Goldman Sachs projects Brent crude to fall from an average of $80 per barrel in 2024 to $76 in 2025. JPMorgan analysts predict a further decline to $73 per barrel, while Bank of America anticipates a bearish scenario with prices reaching $65 per barrel.
However, some analysts caution that Trump's sanctions on oil producers Venezuela and Iran could be a wildcard that could push prices higher.
Despite the expected price drop, gasoline prices are unlikely to reach the levels promised by Trump during his campaign. Analysts attribute this to narrowing refinery margins and continued high production costs. The current national average price of $3.07 per gallon is unlikely to fall significantly below this level in the near term.