MARC Ratings: Oil Prices To Range Between US$65 And US$75 Per Barrel In 2025
KUALA LUMPUR, Nov 22 (Bernama) -- Malaysian Rating Corporation Bhd (MARC Ratings) has projected that oil prices will likely range between US$65 (US$1=RM4.46) and US$75 per barrel in 2025.
The rating agency said that the potential upside risks to this forecast include heightened geopolitical conflicts involving major oil suppliers, stronger-than-expected economic performance in the US and China, and extended production cuts by OPEC+ members.
It also noted that oil prices in 2024 are expected to average approximately US$80 per barrel, in line with the low end of its projected range.
“Despite the OPEC+ production cuts, slow demand growth and diminishing geopolitical risk premiums have kept Brent oil price below US$80 per barrel since the third quarter of 2024,” it said in a statement.
MARC Ratings, however, said despite diminishing effects, geopolitical tensions continue to drive short-term oil price volatility, with recent spikes reflecting heightened instability in the Middle East.
However, Iran’s energy infrastructure remains intact, and there has yet to be any impact on the Strait of Hormuz, a crucial transit route for roughly one-fifth of global oil demand.
“A disruption in production or along the transit routes could trigger a sharp surge in crude oil prices; based on our estimates, a 10 per cent reduction in oil supply could potentially drive prices up by 12 per cent,” it explained.
In terms of demand, the agency said the ongoing loosening of global interest rates, particularly in the US, could revitalise manufacturing activity and weaken the dollar in 2025.
However, the dollar weakness will depend on bond yield movements, which are influenced by shifts in US policy on public spending and global demand for crude oil may follow suit, though the pace and scale of this recovery would remain uncertain.
In 2024, weaker-than-expected macroeconomic performance and high interest rates have constrained demand, with global consumption growth decelerating to 1.0 per cent (2023: 2.1 per cent; 2022: 2.6 per cent).
China, the world’s largest oil importer, saw its imports drop by 3.5 per cent through the first 10 months of 2024 (10M2023: 14.5 per cent).
“Global oil consumption could improve to 1.2 per cent in 2025 as the global easing of interest rates takes effect, alongside a recovery in demand from China.
“However, China’s growth faces increased downside risks due to the potential rise in US protectionism following Donald Trump’s victory in the recent presidential election,” it said.
On production, it said global crude oil and other liquid fuels are projected to grow by 2.0 per cent in 2025 (2024: 0.6 per cent; 2023: 1.8 per cent), largely driven by increased output from the US, where production is expected to expand by 2.3 per cent, according to data from the Energy Information Administration.
MARC Ratings said this growth aligns with Republican policies prioritising energy security, where the potential deregulation of traditional energy policies could further boost output.
Additionally, OPEC+ plans to begin easing its production cuts at the end of December 2024, increasing supply to the market.
Therefore, persistently high output, coupled with oversupply concerns, is expected to place downward pressure on prices, barring any significant geopolitical disruptions.
-- BERNAMA
