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Petroleum forecast price in 2025
Petroleum is one of the most important commodities in the global economy. It is used for transportation, heating, electricity generation, and as a raw material for various industries. The price of petroleum depends on many factors, such as supply and demand, geopolitics, environmental regulations, and technological innovations. In this blog post, we will explore some of the main drivers and scenarios that could affect the petroleum price in 2025.
Supply and demand
The supply and demand of petroleum are influenced by the production and consumption patterns of different countries and regions. According to the U.S. Energy Information Administration (EIA), the world production of petroleum in 2020 was about 92.2 million barrels per day (b/d), while the world consumption was about 92.3 million b/d. The COVID-19 pandemic caused a sharp decline in both production and consumption in 2020, as lockdowns and travel restrictions reduced the demand for oil. However, as the global economy recovers from the pandemic, the EIA expects the production and consumption to increase to 101.1 million b/d and 101.5 million b/d respectively by 2022.
The EIA also projects that the production and consumption will continue to grow until 2025, reaching 104.1 million b/d and 105.6 million b/d respectively. However, the growth rates will vary across different regions. For example, the EIA expects that the production in North America will increase by 2.4 million b/d from 2020 to 2025, while the production in Africa will decrease by 0.4 million b/d. On the other hand, the EIA expects that the consumption in Asia will increase by 6.4 million b/d from 2020 to 2025, while the consumption in Europe will decrease by 0.7 million b/d.
The supply and demand balance of petroleum will affect its price in the global market. Generally speaking, a higher supply than demand will lead to a lower price, while a lower supply than demand will lead to a higher price. However, other factors such as storage capacity, transportation costs, and market expectations can also influence the price dynamics.
Geopolitics
The geopolitics of petroleum involves the political and economic relations among countries that produce, consume, or transit petroleum. The geopolitics of petroleum can have a significant impact on its price, as it can affect the stability and security of supply and demand. For example, conflicts or tensions in major oil-producing regions such as the Middle East or Venezuela can disrupt the production or export of oil, creating a supply shock that can drive up the price. Conversely, cooperation or agreements among major oil-producing countries such as OPEC (Organization of the Petroleum Exporting Countries) or OPEC+ (OPEC plus Russia and other allies) can stabilize or increase the production or export of oil, creating a supply glut that can drive down the price.
The geopolitics of petroleum can also affect the demand for oil, as it can influence the economic growth and energy policies of major oil-consuming countries such as China or India. For example, trade wars or sanctions can hamper the economic activity or access to oil markets of some countries, reducing their demand for oil. Conversely, diplomatic or strategic partnerships can foster the economic development or energy diversification of some countries, increasing their demand for oil.
The geopolitics of petroleum is often unpredictable and volatile, as it depends on the interests and actions of various actors and stakeholders in the global arena. Therefore, it is difficult to forecast how it will affect the petroleum price in 2025.
Environmental regulations
The environmental regulations of petroleum refer to the laws and policies that aim to reduce the environmental impact of petroleum production and consumption. The environmental regulations of petroleum can affect its price, as they can influence
the cost and feasibility of producing and consuming oil. For example, stricter regulations on greenhouse gas emissions or air quality standards can increase the cost or limit the scope of extracting or refining oil, reducing its supply or profitability. Conversely,
looser regulations on environmental protection or renewable energy subsidies can decrease
the cost or expand the potential of producing or consuming alternative fuels such as biofuels or electricity,
reducing its demand or competitiveness.
The environmental regulations of petroleum vary across different countries and regions,
depending on their level of development,
environmental awareness,
and political will.
For example,
the European Union has adopted ambitious targets
and measures
to reduce its greenhouse gas emissions
and increase its share of renewable energy
by 2030,
while
the United States has withdrawn from
the Paris Agreement
and relaxed some of its environmental rules
under
the Trump administration.
However,
the environmental regulations of petroleum are also subject to change