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Oil prices could sink below to $60 in 2025: Citibank

Citibank is turning bearish on crude oil (CL=F, BZ=F) in its latest price forecast predicting Brent crude oil prices will drop down to $60 per barrel in 2025. Yahoo Finance's Morning Brief team reviews Citibank's call, which cites supply surpluses and the transition into renewable energies.

For more expert insight and the latest market action, click here to watch this full episode of Morning Brief.

This post was written by Luke Carberry Mogan.

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Video transcript

A bearish call on crude from Citibank.

The bank forecasting Brent will hit $60 per barrel in 2025 and crude inventories surging by 1.4 million barrels per day next year.

This after OPEC members announced plans to bring 2.5 million barrels per day back to the market in 2025 the banks, citing slowing demand, increasing energy efficiency and more EV versus oil and gasoline usage as headwinds for the commodity here.

You know, I was interested in seeing whether or not we would have gotten some type of a i data centre mention as well within here.

Considering the amount of times we're increasingly talking about utilities being necessary to power even more of these data centres that are going to go from potentially 60,000 chips, as we've seen in some cases all the way up to a million in chips, that means more demand, potentially for oil as well.

Yes, I think there's lots of questions about what exactly that is going to look like when we talk about the biggest drivers here.

I think this just simply comes down to supply versus demand and the supply factors the updates that we've gotten here from, especially when you take into account by 2025 we are expected to have a surplus here in the global market and pairing that with the projections of the forecast that we got IE a yesterday Cities actually recommending that oil producers start to hedge against any of these potential price drops and that investors view any short term Price Ri rise in the in the short term price there as an opportunity to maybe take some of those bearish conditions.

So they're actually expecting a pretty substantial drop from where we are trading today, right around 78 bucks for crude.

They're expecting that to fall all the way to 60.

So again, when you take into account some of the some of the prediction there, the fact that demand clearly when you put it up against supply the surplus of supply is really going to be that clear driver here for prices of Brent crude against slipping at least city views all the way down to 60 bucks.

And I think that that's a real possibility.

And there's also a geopolitical implication within this as well.

I mean, 2025 could hold a vastly different geopolitical landscape than we have right now, especially considering the fact that more than half of the world is expected to participate in, uh, global elections this year.

And so as that takes hold, and as we get even more of those results, it's going to come back to how different countries are viewing their role in energy production and in oil production as well.

So it's gonna be also that factor layered into us actually getting to this prediction that city has laid out here today.