Citing the negative impact of tariffs on global growth, along with rising energy production, Morningstar DBRS is cutting its oil price forecasts for 2025.
DBRS reduced its forecast for West Texas Intermediate crude oil prices to US$60 per barrel from US$65/bbl, amid expectations for slowing demand and rising supply in global markets.
“The double whammy of a tariff-induced global economic slowdown and gradually increasing OPEC+ supply will continue to pressure oil prices in the near term,” it said.
Back in mid-January, oil prices hit a recent high of $81/bbl before dropping to about $64/bbl, as concerns about the impact of trade conflict arose.
“Market angst about weakening crude oil demand was prompted by the recent imposition of larger-than-expected U.S. tariffs. In addition, actual and planned retaliations by other countries are stifling global economic growth,” it said.
With the U.S. accounting for about 20% of global oil demand in 2024 and China representing 16% of demand, the conflict between them and the global economic slowdown “will potentially have a significant negative effect on crude oil demand,” DBRS said.
Additionally, earlier this month, eight OPEC+ countries agreed to gradually phase out voluntary production cuts, which “will potentially exacerbate a surplus being created by a tariff-induced slackening of global demand.”
Whether prices end up falling further than currently expected “will depend on the magnitude and duration of a global economic slowdown, which now appears underway, and how quickly non-OPEC+ oil producers cut output in response to lower prices,” it said.