Oil Prices Poised to Fall in 2025, Handing Trump Early Economic Boost
President-elect Donald Trump has pledged to lower energy costs for Americans by easing regulations on oil and gas drilling. While the industry's response remains uncertain, oil prices and pump prices are projected to decline in 2025 regardless. This could provide a potential economic boost for Trump, following concerns about inflation that contributed to his election victory.
Oil prices fell 3% in 2024, continuing a two-year decline. Despite recent gains, Wall Street analysts predict a downward trend in 2025. This is driven by factors including:
* Near-peak US production, accounting for 20% of global supply
* Executive orders aiming to unwind drilling restrictions
* Spare capacity within OPEC+
* Slowing demand from China as it transitions to electric vehicles
Goldman Sachs analysts forecast Brent crude to fall from $80 to $76 per barrel in 2025. JPMorgan analysts predict a further decline to $73 per barrel, while Bank of America anticipates a drop to $65.
However, Francisco Blanch of Bank of America cautions that Trump's sanctions policy against Venezuela and Iran remains a wildcard. A "maximum pressure" campaign against Iran could lead to supply disruptions and higher prices.
In line with oil price projections, gasoline prices are expected to follow a downward trend in 2025. The Energy Information Administration estimates an average price of $3.20 per gallon, a decrease of $0.10 compared to 2024.
Despite these projections, analysts do not foresee gasoline prices reaching Trump's campaign promise of below $2 per gallon. According to Patrick De Haan of GasBuddy, such a significant decline is unlikely without an economic crisis.