Where Are Oil Prices Headed in 2025? Experts Are Divided

Prices will rise or fall depending on geopolitical events, technological changes, and new policies under incoming President Donald Trump.
Where Are Oil Prices Headed in 2025? Experts Are Divided
Crude oil storage tanks at the oil hub in Cushing, Okla., on March 24, 2016. Nick Oxford/Reuters
Panos Mourdoukoutas
Updated:

The New Year could be another roller coaster for the oil industry. Supply and demand could remain volatile, causing wild fluctuations in price, with experts divided on the direction.

Oil prices were up and down in 2024. In the first half of the year, West Texas Intermediate crude headed higher, trading in the $70-$86 per barrel range. In the second half, they dropped to $65-$82.

Athens-based oil forecaster Kosmas Megaloeconomou expects volatility to continue in 2025, with prices trending higher throughout the year.

Applying a seasonality pricing model (SPM), he predicts that oil prices will trade up in the first seven months of the year, correct in the eighth month, and end the year slightly below $80 per barrel.

“Average monthly crude oil price estimates based on the SPM model are expected to have an increasing trend for 2025, displaying a sigmoid-like curve,” Megaloeconomou told The Epoch Times in an email. A sigmoid curve is S-shaped.

Oil analyst Fanis Matsopoulos, an executive board member of the Greek Chamber of Commerce and Industry, is skeptical about predictions for oil prices based on seasonality alone.

Instead, he sees geopolitical events, technological changes, and a new policy era under the incoming Trump administration and OPEC+ driving prices in 2025.

One geopolitical event affecting supply recently is the persistence of Red Sea tensions. The Houthi attacks from Yemen have forced sea carriers to travel via Africa’s Cape of Good Hope to avoid the Suez Canal, a critical choke point, disturbing the supply of oil from the Middle East to Europe.

“The basic choke point of the Red Sea and Suez Canal is under much friction due to the attacks of the Houthis against commercial vessels,” Matsopoulos said in an email to The Epoch Times.

“It has been causing delays in the deliveries of crude oil to the European markets,” putting upward pressure on prices, he said.

A technological development that could affect demand is the switch from traditional automobiles to electric vehicles.

“Since the automobile industry has adopted a new perspective about clean energy and has focused on car electrification, the demand for crude oil and its distillates will decline in the medium term,” Matsopoulos said.

Adam Ferrari, CEO of Phoenix Capital Group, sees current demand remaining strong, thanks to the growing world population and rising living standards.

“We feel pretty confident we‘ll still see a demand increase in ’25,” he said in an email to The Epoch Times.

The new Trump era could include tariffs on oil from Canadian and Mexican producers and harsh sanctions against Iran.

“These policies will constrain foreign oil supplies, increasing price pressures. At the same time, the Trump era could allow more fracking and expansion of domestic oil supplies,” said Ferrari.

Fracking, which changed the game in the global oil market, has been on recess in recent years, with rig count on the decline since 2014 because of regulations and the COVID-19 shutdown, which lowered oil prices to a point where fracking became unfeasible.

An easing of fracking regulations under the Trump administration could again place the United States in the driver’s seat in the oil market, taking market share from OPEC+. At the same time, this development could fuel a price war, driving prices lower in 2025.

“Since the frackers will be the cornerstone of Trump’s economic policy and the basic tool for U.S. energy dominance, it could drive oil prices lower again,” said Matsopoulos.

“The recent encouragement to the EU members to buy more U.S. [liquefied natural gas] creates the prospect of a global oil glut.”

In the end, Matsopoulos sees the political variable of this equation pushing downward predictions for crude oil prices in 2025.

“One of the most important statements of Donald Trump was that he would ‘fight’ inflation and provide ‘cheap’ energy, a statement directly linked to low crude oil prices,” he said. “We believe the oil market is bearish, with a target range in Q3 2025 from $64-$66 per barrel.”

Panos Mourdoukoutas
Panos Mourdoukoutas
Author
Panos Mourdoukoutas is a professor of economics at LIU in New York. He also teaches security analysis at Columbia University. He’s been published in professional journals and magazines, including Forbes, Investopedia, Barron's, New York Times, IBT, and Journal of Financial Research. He’s also the author of many books, including “Business Strategy in a Semiglobal Economy” and “China's Challenge.”