Citi Raises Average 2025 Oil Price Forecasts, Citing Geopolitical Risks

In a recent report, Citi analysts raised their average 2025 oil price forecasts, citing geopolitical risks as a significant factor driving the upward revision. The new forecast places Brent crude oil prices at $85 per barrel (bbl) and West Texas Intermediate (WTI) at $80 bbl, reflecting a more bullish outlook on the global oil market.

Geopolitical risks, such as intensified sanctions on Iranian oil exports and potential supply disruptions, have contributed to the upward revision in oil price forecasts. The US government's expansion of sanctions on vessels transporting Iranian crude, coupled with the ongoing conflict in the Middle East, has created uncertainty and volatility in the oil market. These geopolitical developments have the potential to reduce global oil supply, leading to increased prices in the short term and long-term supply-demand imbalances.



In addition to geopolitical risks, market expectations for U.S. politics and policy changes are anticipated to have a limited impact on oil pricing and domestic oil and gas operations in the near future. Industry professionals believe that the U.S. political landscape is not as pivotal as previously perceived in influencing oil pricing and domestic oil and gas operations. However, intensified sanctions on Iranian oil exports under expected policy changes could provide some support for oil prices in the short run.



OPEC+ production management strategies also play a crucial role in maintaining global oil market stability and supporting prices in 2025. The organization's decision to postpone oil output increases to April 2025 and extend their current cuts until the end of 2026 reflects an analysis suggesting that production increases from non-OPEC sources may surpass demand growth. This conservative approach to managing production levels could help to balance the global oil market and prevent a significant surplus, which would otherwise put downward pressure on prices.

In conclusion, Citi's raised average 2025 oil price forecasts highlight the significance of geopolitical risks in shaping the global oil market. As the world navigates an increasingly complex geopolitical landscape, investors and market participants must remain vigilant to the potential impacts on oil prices and supply-demand balances. By understanding and mitigating these risks, stakeholders can better position themselves to capitalize on opportunities in the oil market.