Global oil and gas prices are expected to ease in the year ahead, as energy demand weakens and supply ramps up, but geopolitical risks could intensify price volatility, Fitch Ratings says.
In a new report, the rating agency noted that its baseline expectation is for average global oil prices to decline to about US$70 per barrel in 2025 from around US$80 per barrel this year.
This outlook is underpinned by expectations for slowing demand growth, and higher production from non-OPEC countries, it said.
However, Fitch noted that this forecast is clouded by geopolitical risks.
“Significant geopolitical developments, such as military escalation in the Middle East or changes in international sanctions, could disrupt supply chains in the global oil and gas sector, and increase its volatility,” it said.
OPEC still has the ability to mitigate these risks by managing oil supply, Fitch noted.
“The group has delayed oil production increases until April 2025 and prolonged the complete reversal of cuts by a year, until end-2026,” it said.
Fitch has a neutral outlook on the global oil and gas sector for 2025.
The North American energy sector, “remains focused on returning capital to shareholders rather than organic growth,” it said, adding that there is also financial capacity for growth through M&A.