Fitch slashes 2025 oil price forecast amid slowing growth, rising OPEC+ output

Fitch Ratings has revised its oil price assumptions downward for 2025, citing slower global economic growth driven by the intensifying trade war and higher-than-expected oil production increases planned by OPEC+ starting May.

In its latest update, the agency forecast global GDP growth to slow sharply to 1.9% in 2025 from 2.9% in 2024. The resulting hit to global oil demand — expected to rise by less than one million barrels per day (mmbpd) — has prompted the adjustment. Demand headwinds are most pronounced in China and the petrochemicals sector, the latter of which remains in a downturn.

While Fitch maintained its medium-term and mid-cycle oil and gas price assumptions, the near-term outlook has dimmed. “The reduced short-term oil price assumptions reflect a sharp slowdown in global economic growth,” the agency said, adding that the oil market is likely to remain oversupplied throughout 2025.

OPEC+ currently holds about 5.6 mmbpd in spare production capacity. The alliance had earlier signaled plans to begin unwinding 2.2 mmbpd of voluntary production cuts between April 2025 and September 2026. Initially, the group targeted an increase of 138,000 barrels per day (kbpd) in April and 135 kbpd in May. However, in a surprise move on April 3, OPEC+ announced a significantly larger increase of 411 kbpd for May — though it noted the actual ramp-up would depend on market conditions.

The decision could further tilt the oil market into oversupply. Should OPEC+ follow through on its planned increases, Fitch expects global oil supply to rise by over 1.6 mmbpd in 2025. However, actual increases may vary depending on the compliance of member countries, some of which have been overproducing.

In the U.S., a lower price environment may curtail drilling activity, as most producers require a West Texas Intermediate (WTI) price of $65 per barrel to break even, according to the Dallas Federal Reserve Energy Survey.

Additionally, new U.S. sanctions targeting Iranian and Venezuelan oil exports may constrain output and global supply to a limited degree. Iran, which predominantly exports to China, is expected to be the most impacted.