Oil analysts at Norway-based Rystad Energy have projected that global crude oil prices could drop to approximately US$60 per barrel by 2027 as demand growth slows, which could mark a significant decline from next year’s peak price.
This forecast provides a contrasting view to recent Wall Street predictions of prices reaching up to US$150 per barrel within the next two years. Rystad Energy’s long-term outlook suggests that prices may peak at US$91 per barrel in the coming year before experiencing a substantial drop to as low as US$50.
According to Claudio Galimberti, Rystad Energy’s Head of North America Research, the main driver behind this decline is the peaking of demand for crude oil. Galimberti mentioned during an event in Houston that Rystad Energy anticipates prices will taper off over the next three to four years, primarily due to an abundant supply of oil.
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While the oil producers’ group OPEC+ has managed to influence oil prices this year by reducing output, Galimberti believes that this strategy is not sustainable in the long term.
OPEC’s recent production cuts have not been welcomed by some in the West, considering that the energy market is recovering from the pandemic. The International Energy Agency (IEA) has traded harsh words with OPEC because of it.
Regarding global oil demand growth, it is expected to decelerate significantly. It averaged 3.7 million barrels per day (bpd) in the previous year but is projected to decrease to 2.4 million bpd in the current year, 1.2 million bpd by 2025, and only 500,000 bpd by 2026.
Looking beyond 2026, Rystad Energy anticipates that oil prices will be influenced by the world’s energy transition towards cleaner sources and the level of investments made in new fossil fuel production.
In its projections, Rystad Energy suggests that Brent crude prices could start to rise again after 2027, potentially surpassing US$50 per barrel. This scenario assumes a base case where global temperatures increase by 1.9 degrees Celsius above pre-industrial levels by 2050.
