Wells Fargo: Oil prices will remain low through 2025 due to global oversupply

Analysts at Wall Street bank Wells Fargo predicted that oil prices will remain lower through 2025 due to the increased risk of global oversupply. According to experts, a combination of persistent growth in US shale production, as well as slowing demand from key economies, especially China, are the main factors behind the decline. Wells Fargo says the anticipated easing of OPEC+ production cuts until the end of 2024 further supports the likelihood of a supply glut in 2025, despite current market tightness.

Wells Fargo predicted global oil supply would rise from 102.8 million bpd in 2024 to 104.8 million bpd in 2025?, boosted by non-OPEC producers such as the US and Brazil, along with OPEC’s planned increases. Analysts have drawn parallels between the current state of the oil market and conditions in 1998, when oil prices collapsed triggered by a combination of a global economic slowdown and an influx of new supply.

“We’re not calling for a repeat of 1998 in 2025, but we fully understand investors’ concerns given the economic uncertainties in China and OPEC+’s stated desire to reverse its restrictions.” analysts said.

However, the increase in US shale supply is unlikely to play a major role in the global oversupply as it has in recent years. U.S. oil production rose just 0.1 million bpd through the end of the third quarter, well below an average of 0.6 million bpd in previous years of growth.

Wells Fargo adjusted its oil price forecast downward. The banker now expects Brent crude to average $70 a barrel in 2025, while West Texas Intermediate (WTI) crude oil is expected to average $65 per barrel in 2025.

However, Wells Fargo acknowledged that several factors could change the trajectory of oil prices, including a faster-than-expected recovery in global demand, particularly from China and OECD countries.

By Alex Kimani for Oilprice.com

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