BofA Securities Forecasts $65 Oil Price in 2025: What Investors Need to Know
BofA Securities analysts have projected that oil prices will average $65 per barrel, with West Texas Intermediate (WTI) expected to hit $61 per barrel in 2025. This forecast is based on a detailed analysis of the oil market’s supply-demand dynamics, outlined in their latest energy outlook.
According to the analysts, global oil demand is set to increase by 1.1 million barrels per day (b/d) next year. However, a more robust rise in non-OPEC+ supply by 1.4 million b/d is expected, leading to a surplus of 800,000 b/d in 2025 and putting downward pressure on prices. The report also highlights the potential reinstatement of 2.2 million b/d of supply by OPEC+ if market conditions require, adding further uncertainty.
Various risks could influence price trends, including the possibility of global trade or OPEC+ price wars driving prices below forecast levels. On the upside, geopolitical tensions and tighter enforcement of U.S. sanctions could lead to price spikes. Monetary or fiscal easing in major economies might stimulate demand, offsetting some of the expected price pressures.
Analysts also mention a structural floor for oil prices at around $60 per barrel for Brent, due to elevated production costs for alternatives like Chinese coal and European gas. This could help stabilize prices despite the projected market surplus. Refined product markets, such as gasoline and diesel, are expected to face downward pressures, with rising refining capacity and soft demand contributing to weak margins.
In conclusion, investors should be aware of the potential for oil prices to fluctuate in 2025 based on supply-demand dynamics, geopolitical factors, and economic conditions. It is essential to stay informed and monitor market trends to make informed investment decisions.