Citi analysts have predicted that oil prices will drop to an average of $60 per barrel next year due to the energy policies of the incoming U.S. administration. Import tariffs and increased oil production are expected to be the main drivers behind this forecast.
The analysts also mentioned that President Trump could use his influence on OPEC+ to convince the group to increase supply, which could further push prices down. Additionally, a potential decline in geopolitical tensions under Trump’s presidency may contribute to lower oil prices.
On the other hand, the new administration’s energy policies could lead to stronger government support for oil and gas investments, potentially boosting production. However, this increase in supply may also put pressure on prices, leading to a cycle of lower production in the long run.
Goldman Sachs analysts also weighed in on the potential impact of a second Trump term on oil prices, mentioning both upside and downside risks. They highlighted the uncertainty surrounding demand and prices due to the administration’s trade policies.
Furthermore, the discussion around prices and production growth motivation is crucial. While pro-growth energy policies may stimulate more production, they could also lead to price depression, ultimately impacting production levels in the industry.
In terms of federal leases for oil and gas, if the Trump administration opens up these opportunities, companies may struggle to make profits at lower oil prices. With Federal lands receiving 25% of revenues per barrel, the oil industry could face challenges in maintaining profitability at lower price points.
Overall, the future of oil prices under the Trump administration remains uncertain, with various factors at play that could influence supply, demand, and ultimately, the market dynamics. Investors and industry experts will closely monitor developments to assess the impact on oil prices in the coming year.