Fitch Ratings has reduced its Brent and WTI oil price assumptions for 2025, reflecting lower economic growth due to the trade war and higher-than-expected production increases by OPEC+ planned for May. Medium-term and mid-cycle oil and all gas price assumptions are unchanged.

The reduced short-term oil price assumptions reflect a sharp slowdown in global economic growth – to 1.9% in 2025 from 2.9% in 2024, according to our latest forecast – which will reduce oil demand. We forecast global oil demand growth to be well below 1 million barrels per day (MMbpd) in 2025 due to slower global economic growth, particularly in China, and further weakness in the petrochemicals sector, which is already in a downturn.

OPEC+ has significant spare production capacity of 5.6 MMbpd, and its supply management is important to balance the market. It had indicated plans to start unwinding 2.2 MMbpd of production cuts from April 2025 until September 2026, initially setting April’s increase at 138 thousand barrels per day (kbpd) and a further 135 kbpd in May. On 3 April, OPEC+ announced a larger production target increase of 411 kbpd for May but caveated that these increases are subject to market conditions. The actual increase may be lower given overproduction by some countries.

We continue to expect the global oil market to be oversupplied in 2025. We expect global oil supply growth in 2025 of over 1.6 MMbpd if OPEC+ proceeds with the unwinding of voluntary production cuts as scheduled. This may be affected by the response of the countries producing above their quotas to OPEC+'s decision to triple its output target increases for May. Lower prices may also reduce new well starts in the US, where producers, on average, require a WTI price of USD65/bbl to drill profitably, according to the Dallas Fed Energy Survey. New US sanctions on oil exports from Iran and Venezuela may affect their production and exports to a certain extent (Iran mostly exports to China).
Source: Fitch Ratings