Geopolitical tensions and oil: how prices will change by the end of 2025
3 June 2025 14:54
Oil prices remain one of the hottest topics in global markets, as they affect not only the economies of countries but also everyday life, including the cost of fuel at gas stations. In 2025, the oil market is expected to be highly volatile due to geopolitical tensions, OPEC decisions, and economic factors.
Geopolitical tensions and the oil market
The geopolitical situation in 2025 continues to affect oil prices. Escalating trade tensions, in particular due to new duties imposed by the US administration, and instability in the actions of OPEC countries create uncertainty in the market. At the same time, the growth in oil supply caused by OPEC’s decision to increase production is helping to reduce prices.
Energy expert Gennadiy Ryabtsev in a commentary
“Oil production is increasing now. And it’s not because of anything to do with America or Iran, but because the OPEC has been deciding to increase production quotas for the third month in a row. And every month they increase quotas by 411 thousand barrels per day. This is not yet a return to the volumes produced by this OPEC in 2021, but it is a decisive progress. This means that there will be more and more oil supply on the market,” Ryabtsev said.
According to the analyst, if such a policy continues, oil may fall in price in the summer, and it is possible that the price of Brent will drop to the psychological level of $50 per barrel.
“And if this policy continues, oil prices may go down in the summer. It is not yet clear to what level, because in addition to decisions, they need to be implemented. So we will see how much more of this supply will be on the market. But if this happens, we will get $50 per barrel. And if we get $50 per barrel, it will mean that there will be a downward trend in prices for petroleum products, including at Ukrainian gas stations,” the expert notes.
Mr. Ryabtsev emphasizes that lower prices could affect currency markets, particularly the hryvnia:
“Everything will depend on two factors. The first is whether this decline will also lead to the devaluation of the Ukrainian currency. Because the commodity and currency markets in the world are very much connected. If the price of oil falls, then the currencies of emerging economies also weaken.”
Impact on Ukraine
Lower oil prices could have a positive impact on Ukrainian consumers, in particular, by reducing the cost of fuel.
However, the expert cautions that lower oil prices do not necessarily guarantee cheaper fuel in Ukraine, as everything will depend on the hryvnia exchange rate.
“If the hryvnia manages to keep its value against the euro during the summer, motorists will feel the decline in prices for petroleum products at gas stations. If not, if the hryvnia weakens, then at least the cost of fuel will not rise,” he explains.
The oil market is moving in a downward trend
Energy expert Volodymyr Omelchenko shares a similar opinion. In an exclusive commentary
“The oil market is quite volatile this year, as we can see. Indeed, there are constant fluctuations, but the trend is generally downward. Since the beginning of the year, they have declined. This is primarily due to rather low global economic growth, including due to the chaotic policy of the new US administration,” Omelchenko said.
Among the reasons for such dynamics, he names low global economic growth, political instability in the United States and lack of coherence within OPEC.
“First of all, it concerns the introduction of duties. And also the fragmentation in the actions of OPEC countries. This organization no longer works as planned and as coordinated as it used to. A significant number of countries from this organization, especially Kazakhstan and Russia, want to violate the agreements. And Saudi Arabia has decided that they will increase the production quota and will not completely refrain from increasing quotas, relying on other countries, because other countries do not want to comply with these quotas,” the expert adds.
Omelchenko predicts that by the end of 2025, Brent crude oil prices could drop to $55-60 per barrel:
“That’s why all these factors have led to the fact that this trend is generally going down. Now the price of oil has slightly increased by a few percent. But I think that by the end of the year we can see the price per barrel somewhere in the range of $55-60. It will be even lower than it is now, by about $5-10 on average. This applies to Brent. In general and on average. Although fluctuations may vary,” he predicts.
IMF forecast for oil prices for 2025-2027
The International Monetary Fund (IMF) in its World Economic Outlook report for April 2025 predicts a decline in oil prices in the coming years. According to the forecast:
- 2025: the average price of Brent crude oil will be $66.9 per barrel, which is 15.5% lower than in 2024.
- 2026: the price will drop to $62.4 per barrel.
- 2027: The IMF does not provide an exact forecast for 2027 in the available data, but the downward trend in prices is likely to continue due to rising supply and slowing demand, particularly in China, due to the transition to electric vehicles and alternative energy sources.
According to the forecast, oil prices declined by 9.7% from August 2024 to March 2025 and “fell sharply in early April amid escalating trade tensions, which reinforced the pessimistic outlook.” At the same time, the IMF expects that oil supply growth in 2025-2026 will exceed demand on world markets.
The IMF noted that “energy prices are expected to fall by about 7.9% during the year. In addition to the decline in oil prices, the Fund’s experts expect coal prices to fall by an average of 15.8%.
