Oil price forecasts have experienced significant reductions as analysts anticipate weaker demand for the latter part of 2025. This decline is mainly attributed to U.S. trade tariffs and ongoing economic uncertainty.
The U.S. benchmark for crude oil, West Texas Intermediate (WTI), reached a high of over $80 in mid-January. However, prices have since dropped to the $60-range, nearing four-year lows.
Andrew O’Conor, an analyst at Morningstar DBRS, highlights that the U.S. and China, the main players in the current trade war, are also the largest consumers of oil worldwide. In 2024, these two nations accounted for about 36 percent of global oil demand.
Recently, President Trump announced that discussions with China are underway to ease the tariffs, although Chinese officials have denied any negotiations. Adding to the price decline, OPEC+ producers revealed plans to roll back voluntary production cuts that were implemented earlier in March.
Morningstar DBRS has reduced its WTI forecast for 2025 from $65 to $60 per barrel, while maintaining predictions for 2026 and 2027. Additionally, they have lowered their price forecast for Western Canadian Select by $5 per barrel.
The impending global economic slowdown, particularly focused on the U.S. and China, is expected to have a detrimental impact on crude oil demand. O’Conor notes that any further price declines will depend on the severity and duration of the economic downturn, as well as the responsiveness of non-OPEC+ oil producers to market changes.
Deloitte’s latest report expects WTI to average $68 per barrel in 2025. They also caution that the oil and gas industry could be heavily affected by the economic impacts of tariffs, potentially stressing oil demand and weakening Canadian oil exports.
Goldman Sachs has projected that benchmark oil prices might drop to the $50 range by year’s end if trade barriers lead to a recession. As Canada’s largest oil producers prepare to report their first-quarter results, RBC Capital Markets has updated their WTI outlook to $64, remaining optimistic about the quality of Canadian oil stocks despite recent challenges.