2025 Crude Oil Fundamental Preview
This is an excerpt from our full 2025 Crude Oil Outlook report, one of nine detailed reports about what to expect in the coming year.
Crude oil prices in 2025 are set to be influenced by a mix of competing forces: China’s economic policies, Trump’s energy agenda, OPEC strategies, geopolitical conflicts, and the global shift to clean energy. The market remains range-bound, with uncertainty delaying a decisive breakout. Will 2025 be the year a clear direction emerges?
Key Events:
- OPEC and IEA Divergent Forecasts
- China’s Monetary Policies and Demand Potential
- Geopolitical reformations and risk premiums
- Trump’s Drill baby Drill Agenda
- Clean Energy Transitions
OPEC and IEA Forecasts
OPEC issued its fifth consecutive downward revision in December for 2024 oil demand forecasts, accompanied by another cut for 2025, citing economic growth risks in key markets like China. This marks the largest adjustment since June, following the group’s decision to extend output cuts. The 2024 demand estimate was reduced from 1.82 million barrels per day (bpd) to 1.61 million bpd, while the 2025 forecast dropped from 1.54 million bpd to 1.45 million bpd. Despite these cuts, the global oil market is projected to return to a surplus in 2025, driven by increased production from non-OPEC members.
In contrast, the IEA predicts accelerated demand growth, with oil consumption rising from 840,000 bpd in 2024 to 1.1 million bpd in 2025, reaching a total of 103.9 million bpd. This increase is primarily attributed to petrochemical feedstocks, while transport fuel demand continues to lag due to technological advancements and changing consumer behavior.
These contrasting forecasts from OPEC and the IEA underscore the uncertainty surrounding oil prices, keeping the market in a range-bound consolidation phase. The longer this persists, the sharper and more decisive the eventual breakout—bullish or bearish—is expected to be.
China’s Monetary Policy and Demand
China is set to implement a “moderately loose” monetary policy in 2025, marking its first such move in 14 years. The last instance of this approach occurred during the 2008–2009 financial crisis, when China stimulated its economy through interest rate cuts, reserve requirement reductions, and increased fiscal spending. These measures spurred rapid credit expansion, economic growth, and inflation but were scaled back in 2011 to mitigate bubble risks.
While the specifics of China’s 2025 policy remain unclear, a similarly aggressive approach is anticipated as a response to potential trade conflicts under Trump’s administration. If successful, this stimulus could significantly boost oil demand and shift forecasts to the upside. However, failure to achieve the desired economic impact—coupled with 2025’s oversupply risks from non-OPEC producers—could add notable bearish pressures.
Trump’s “Drill Baby Drill” Agenda
Risks of oil overproduction are expected to dominate headlines in 2025, driven by Trump’s "Drill Baby Drill" agenda and Treasury Secretary Bessant’s 3-3-3 plan. The plan aims to increase oil output by 3 million barrels, achieve 3% GDP growth, and reduce the budget deficit by 3%. This oversupply strategy challenges OPEC+ countries, which had planned to unwind voluntary supply cuts initiated in 2022. To stabilize the market, OPEC+ extended these cuts through April 2025, though persistent downward revisions in demand forecasts—compounded by China’s economic contraction—highlight ongoing challenges.
Clean Energy Transitions
According to the IEA’s latest report, the global market for clean technologies—including solar PV, wind turbines, electric vehicles, batteries, electrolysers, and heat pumps—is projected to triple to over $2 trillion by 2030. This surge in clean energy adoption poses a significant challenge to oil demand forecasts, contributing to bearish sentiment. However, critics highlight the environmental limitations and inefficiencies of renewables, emphasizing the irreplaceable role of oil in the global energy mix. These contrasting views support the uncertainty in oil prices.
This is an excerpt from our full 2025 Crude Oil Outlook report, one of nine detailed reports about what to expect in the coming year.
From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.
As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.
City Index is a trading name of StoneX Financial Pty Ltd.
The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.
While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.
StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.
It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.
StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.
© City Index 2024