Oil prices could be in for a rough ride, with prices potentially plummeting. According to the World Bank, Brent crude oil could average $73 per barrel in 2025, marking a sharp drop to a five-year low, due to a projected supply glut in the global oil market.
Forecasts suggest that Brent will average $80 per barrel in 2024 before falling to $73 per barrel in 2025 and $72 per barrel in 2026. In addition, analysts predict a 3% decline in commodity prices this year and a 5% slide in 2025.
The World Bank attributes this drop to an oversupply situation. Global oil supply is estimated to exceed demand by an average of 1.2 million barrels per day in 2025. This level of oversupply has only been seen twice in recent decades: during the 1998 Asian financial crisis and the COVID-19 pandemic, both times coinciding with sharp declines in oil prices.
According to experts, any decline in Brent crude oil poses a challenge to Russia, as its budget is tied to the benchmark price of Urals crude, which is currently trading at a $12.5 discount to Brent. In the medium term, this discount may widen, putting additional strain on the Russian budget.
Earlier, analysts at Gunvor and Trafigura, the world’s top oil traders, predicted that Brent crude could dip as low as $60 per barrel in the coming years, largely due to significant oversupply and slower economic growth in China, a major consumer of hydrocarbons.
