- Citi analysts forecast lower oil prices next year due to potential import tariffs and increased oil production encouraged by the incoming US administration.
- The new administration’s influence on OPEC+ and domestic energy policies could further impact oil prices.
- While pro-growth energy policies might lead to higher production, they could also depress prices due to increased supply.
Citi analysts have forecast that Brent crude would average $60 per barrel next year driven lower by the energy policies of the incoming U.S. administration. The bank noted import tariffs and higher oil production as the driving factors behind this forecast for oil prices. Analysts also suggested Trump may use his “influence on OPEC+” to convince the group to bring supply back, including production and oil from floating storage. They also said Trump’s presidency could lead to a decline in geopolitical tensions, further contributing to lower prices. At the same time, energy policies at home could see stronger government support for oil and gas investments, potentially boosting production, Citi analysts also wrote, as quoted by Reuters. “Still, despite the more supportive oil and gas agenda, its immediate impact on physical oil markets is likely to be limited,” they said. “Conceptually, the impact of a potential second Trump term on oil prices is ambiguous, with some short-term downside risk to Iran oil supply … and thus upside price risk,” Goldman Sachs analysts wrote in a note earlier in the week, before the elections. They did add, however, that there was downside risk to demand and prices stemming from Trump’s stated trade policies. There is also the question of prices and production growth motivation because pro-growth energy policies may well lead to more production but they would also depress prices and that, in turn, would lead to lower production as has happened since the oil and gas industry came into being.