If OPEC Eases Voluntary Production Cuts, Oil Could Drop to $40 by 2025

Market observers forecasting a decline in crude oil prices for the upcoming year have indicated that if the oil alliance OPEC+ eases its current production cuts, oil prices could experience a sharp drop. Tom Kloza, head of global energy analysis at reporting agency OPIS, stated, "There is more fear about oil prices in 2025 than there has been for years—at least since I can remember since the Arab Spring. If OPEC doesn’t make a real deal to rein in production, you could drop to $30 or $40 per barrel. They have seen their market shares really shrink over the years."

A drop to $40 per barrel would mean erasing around 40% of current crude oil prices. The global benchmark Brent is currently trading at $72.1 per barrel, while U.S. West Texas Intermediate futures hover around $68.32 per barrel.

Henning Gloystein, head of energy, climate, and resources at Eurasia Group, also mentioned to CNBC that given the likely increase in oil demand next year may not exceed 1 million barrels per day, the complete resolution of OPEC+ supply cuts by 2025 would "undoubtedly lead to a very sharp decline in crude oil prices, likely towards $40 per barrel."

Similarly, Saul Kavonic, senior energy analyst at MST Marquee, suggested that if OPEC+ relaxes cuts without considering demand, it would mean "an effective price war for market share that could send oil to unprecedented lows since Covid." However, analysts indicated that the alliance is more likely to prefer a gradual easing compared to a full-scale and urgent relaxation early next year.