Commentary

Oil and Gas 2025 Outlook: Tight Crude Market Ahead of International Trade and Security Shifts; Cold Wave Boosts Gas Prices

Energy

Summary

Morningstar DBRS published its 2025 outlook for the oil and gas sectors. Current oil pricing is favorable and could incentivize production growth in certain key producing regions, partially offsetting OPEC+ output cuts. The current surge in the oil price should attract more supply into the market, which, in turn, is likely to hold the price back.

Key Highlights:
-- There is no change to our West Texas Intermediate oil price forecast of $65 per barrel (/bbl) for 2025 and $60/bbl for both 2026 and 2027. Anticipated shifts in international trade and international security concerns, which would occur following a change in policies expected from the incoming U.S. presidential administration and the reaction of other countries to these changes, are likely to affect the global oil supply/demand balance and future price trend.
-- We are increasing our full-year 2025 New York Mercantile Exchange (NYMEX) natural gas price forecast to $3.50 per thousand cubic feet (/mcf) from $3.25/mcf to reflect the strong, cold-weather driven start to the year. There is no change to our NYMEX forecast of $3.50/mcf for both 2026 and 2027.

"Uncertainties related to anticipated changes in U.S. policy and ongoing geopolitical risks from regional conflicts are likely to skew global oil supply/demand fundamentals in 2025," said Andrew O'Conor, Vice President, Corporate Ratings, Energy & Natural Resources. "We expect the U.S. natural gas supply/demand balance to continue to tighten, supporting natural gas prices, as an extended cold wave grips the U.S., boosting demand for space heating and gas-fired electricity and aided by increasing liquefied natural gas exports."

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