Global Economic Slowdown and OPEC+ Decisions Impact Oil Prices

In a significant update, Fitch Ratings has adjusted its 2025 oil price forecasts downward, pointing to weaker global economic growth due to ongoing trade tensions and an anticipated increase in OPEC+ production. The revised forecasts now project Brent crude to average $65 per barrel, a decrease from the previous $70, and West Texas Intermediate (WTI) to settle at $60, down from $65.

Oversupply Concerns Loom Over 2025 Oil Market

The adjustment in forecasts is largely attributed to fears of an oversupply in the oil market by 2025. With OPEC+ planning to ease voluntary production cuts starting May, global output could surge by more than 1.6 million barrels per day. Further complicating the market outlook are uncertainties surrounding producers exceeding their production quotas and the potential repercussions of new U.S. sanctions targeting Iran and Venezuela.

Medium-Term Outlook Remains Unchanged Despite Short-Term Adjustments

Despite the downward revision in short-term price assumptions, Fitch has maintained its medium-term and mid-cycle projections for oil and gas. In the United States, the lower price environment may deter new drilling activities, as industry surveys indicate that many producers require at least $65 per barrel to break even.