By Florence Tan, Emily Chow and Siyi Liu
In a recent statement, Russell Hardy, CEO of Vitol, the world’s largest independent oil trader, predicts that global oil prices will remain in the $70 to $80 per barrel range in 2025, similar to the previous year. Despite this stability, geopolitical risks continue to pose uncertainty around oil supply.
Concerns about a potential unwinding of OPEC+ supply cuts in 2025 and China’s sluggish oil demand growth have kept a cap on world oil prices. The market is also driven by uncertainties surrounding the Middle East, including Iranian and Venezuelan exports under the new U.S. Trump presidency.
Hardy emphasized that geopolitical tensions and unknown factors in the Middle East make it premature to assume that the market will be oversupplied in 2025. China, as the world’s largest importer of oil, faces challenges in sourcing cheap Iranian crude due to potential sanctions enforcement by the U.S.
Janet Kong, CEO of Hengli Petrochemical International, noted that there is currently 4 million barrels per day of spare oil capacity globally, easing concerns about supply shortages. She anticipates that fuel demand growth in China and India will be key drivers of global oil prices in 2025.
Despite weak fuel demand and export limitations, Chinese refining utilization rates have fallen below 80%, a level considered low by industry standards. Kong believes that Chinese refining margins are unlikely to rebound in the near future.
Hardy also mentioned that China’s oil demand is projected to increase by 700,000 bpd in 2025, indicating a more normalized growth compared to the previous years. The recovery from the pandemic has shaped a different trajectory for China’s oil consumption.
Analysis:
In summary, Vitol’s CEO anticipates stable global oil prices in 2025, with geopolitical risks and uncertainties around supply playing a crucial role. Factors such as China’s oil demand growth, potential sanctions on Iranian exports, and spare oil capacity globally will influence the oil market dynamics. Investors and consumers should monitor these developments to assess their impact on financial markets and energy prices.
