Citigroup expects oil prices to fall to USD60 in 2025 amid oversupply, weak demand

(MENAFN) Citigroup's recent note suggests that the average price of oil could drop to USD60 per barrel by 2025 due to a combination of decreased demand and rising supply from non-OPEC countries. The bank's analysts indicate that if Brent crude prices fall to this level, they might experience additional downward pressure, potentially reaching USD50 per barrel before any potential recovery. Geopolitical tensions, which were initially expected to drive up oil prices, have instead resulted in weaker price rallies since October 2023. Market participants now view these geopolitical events as opportunities to sell rather than signals of sustained price increases.

The return of Libyan oil production and the anticipated short-term nature of the disruptions have encouraged some traders to re-engage in short selling. Citigroup recommends selling Brent crude if prices approach USD80, given the current market dynamics. In response to the evolving market conditions, Goldman Sachs has adjusted its 2025 Brent crude price forecast downward by USD5 per barrel, attributing the change to slower demand growth in China. Conversely, UBS maintains an optimistic outlook, predicting that Brent crude could surpass USD80 per barrel in the near term due to ongoing supply shortages despite weak Chinese demand. The organization OPEC+ is also revisiting its plans to ease production cuts, with discussions underway about possibly postponing the scheduled output increase for October due to recent declines in oil prices. 

MENAFN05092024000045015682ID1108639453