Crude oil prices are anticipated to fluctuate over the next few years, with a potential increase to $80 per barrel in the fourth quarter of 2024, followed by a drop to the low $60s by the conclusion of 2025, as per a recent report by JP Morgan. The current volatility in prices is attributed to geopolitical tensions in West Asia, with key players in the region like Saudi Arabia and the UAE having strong economic motives to contain the conflict.
According to Natasha Kaneva, the head of global commodities strategy at JP Morgan, the ongoing situation indicates a sustained geopolitical premium in crude prices until the conflict is resolved in the short term. Brent crude prices have recently experienced a steady climb, moving from $71 per barrel in late September to nearly $81 in early October, before settling back to around $73 as concerns about demand emerged. Analysts have pointed out weak demand from major economies such as China and the U.S. as contributing factors to the downward pressure on prices.
Rabobank International has projected that the market could be oversupplied by approximately 700,000 barrels per day in 2025, potentially leading to a decrease in prices. Despite these challenges, Petroleum Minister Hardeep Singh Puri has expressed confidence in India’s ability to manage crude oil supplies effectively, emphasizing that there is currently no shortage of oil. Puri highlighted the additional supplies coming from countries like Brazil and Guyana as helping to stabilize the market, ensuring that India’s crude needs will be met. With India heavily reliant on imports for over 85% of its crude oil, maintaining price stability is essential for managing inflation and domestic fuel costs.
Key insights from the reports by JP Morgan and Rabobank include a forecast of crude prices reaching $80 per barrel in the fourth quarter of 2024 due to geopolitical tensions, followed by a potential drop to the low $60s by the end of 2025 due to weak demand and oversupply in the market. While global oil inventories are currently at their lowest since 2017, the additional supplies from countries like Brazil and Guyana are expected to alleviate some of the pressure.
Despite the forecasts indicating an oversupplied market by 2025, the Energy Information Administration (EIA) has revised its global oil demand forecast for 2025 downwards, now expecting demand to reach 104.3 million barrels per day. OPEC has also adjusted its demand growth projections for 2024 and 2025, citing weaker consumption worldwide. Puri reiterated that India’s energy security remains secure despite these fluctuations, underscoring the country’s readiness to manage any disruptions to global oil supplies.