The International Energy Agency projects global oil supply will exceed demand by over 1 million barrels per day in 2025. This forecast assumes OPEC+ maintains its current production cuts throughout the period.
Non-OPEC+ countries, particularly the United States, Canada, and Guyana, are expected to drive the surplus through increased production. This additional output could challenge OPEC+’s ability to maintain market balance.
The post-covid-19 pandemic demand rebound has largely played out, with growth rates expected to moderate. China’s economic slowdown remains a key concern for demand projections, potentially limiting upside pressure on prices.
Economic headwinds in major economies could further impact consumption patterns, with the transition to cleaner energy technologies also affecting demand growth rates in developed markets.
Price forecasts and market expectations
Major investment banks have provided conservative price outlooks for 2025. Trading commodities analysts at Goldman Sachs forecast Brent crude oil averaging $76.00 per barrel.
J.P. Morgan takes a more bearish stance, projecting Brent at $73.00 per barrel and WTI at $64.00. These forecasts reflect expectations of ample market supply and moderate demand growth.
The U.S. Energy Information Administration anticipates increasing global inventories will pressure prices. Their analysis suggests Brent could average $74.00 per barrel in the latter half of 2025.
These projections indicate a relatively stable price environment, though geopolitical events and OPEC+ decisions could create significant volatility.
Impact on energy trading strategies
Oil trading strategies in 2025 will need to account for potential supply surpluses and price pressures. Risk management becomes crucial in this environment.
Traders should monitor OPEC+ compliance with production agreements, as any breakdown in unity could accelerate price declines. The group’s response to market oversupply will be critical.
Technical analysis of key support and resistance levels will help identify entry and exit points. The $70.00-80.00 range for Brent crude appears significant based on current forecasts.
Commodity trading platforms offer various tools to manage exposure to oil price movements, including stop losses and limit orders.
Key factors to watch
Geopolitical developments remain crucial for oil markets. U.S. energy policy changes could significantly impact global supply dynamics and price movements.
Chinese demand growth will be essential for market balance. Any significant economic stimulus measures could boost consumption and support prices.
The pace of energy transition and electric vehicle adoption could affect demand projections. However, the impact may be limited in the 2025 timeframe.
Source: IG
