Bank of America on Monday predicted Brent crude futures will average $75/bbl this year, as a possible tariff war and uncertainties over sanctions on Russia and OPEC+ production would put a lid on oil prices.

Despite oil price's steady decline from a record high of $122/bb in 2022, Brent futures have traded in backwardation on a combination of low global oil inventories, steady demand-supply balances and ample OPEC spare production capacity.

Backwardation is a market condition that typically signals market tightness when prompt prices are higher than future deliveries.

BofA said oil futures' backwardation has been mainly driven by the OPEC+ policy to curb output with an aim to keep global inventory low and set a floor of $70/bbl.

"Multiple policy uncertainties on trade, sanctions, foreign affairs and even OPEC+ output will likely tilt the balance lower for prices," it said.

BofA forecast Brent to average $73/bbl in 2026. The bank also expects West Texas Intermediate futures to average $71/bbl this year. On Tuesday, April Brent traded at around $73/bbl, and April WTI was at $69/bbl.

Also, the bank said it expects global oil demand growth to average around 1.1 million b/d for 2025 and 2026 following what it called "peak oil demand growth" of 2.3 million b/d in 2023.

"Thereafter, demand for oil should embark on a slower growth path as EVs impact transport fuel use, averaging roughly 106 million b/d over 2025-30 in our projections," it said.

Through 2030, the bank predicts Brent prices to average between $60/bbl and $80/bbl due to expected slow oil demand growth and without drastic changes to oil market fundamentals.

Earlier in February, BofA said in a note that it expects global oil use may struggle to increase above 1% year to year after 2030, as emerging Asian economies instead of the West will be driving oil growth.

This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.

--Reporting by Frank Tang, ftang@opisnet.com; Editing by Michael Kelly, mkelly@opisnet.com

(END) Dow Jones Newswires

February 25, 2025 12:24 ET (17:24 GMT)

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