Several analysts on Wall Street believe that if OPEC stops production cuts next year, oil prices could plummet to $40 per barrel.

If OPEC+ lifts existing production cuts in 2025, coupled with the return of Trump to office, oil prices will face multiple pressures. The new Trump administration could provoke trade frictions, leading to a global GDP decline, further weakening oil demand growth, and potentially encouraging domestic oil & gas production activities in the USA, continuing its previous 'maximum pressure' policy, imposing a new round of sanctions on Iran and Venezuela.

Therefore, investors are generally bearish on oil prices for the next year. Tom Kloza, Global Energy Analysis Director at OPIS Oil Price Reporting Agency, said:

"Concerns about oil prices in 2025 are stronger than ever before. If OPEC+ lifts production cuts without any real agreement to control output, oil prices could fall to $30 or $40 per barrel."

Henning Gloystein, head of energy, climate, and resources at Eurasia Group, also told CNBC that as oil demand growth next year may not exceed 1 million barrels per day, if OPEC+ completely lifts production cuts in 2025, it will undoubtedly lead to a substantial drop in crude oil prices, possibly falling to $40 per barrel.

As of press time, Brent oil is priced at $71.99 per barrel, while WTI crude oil is priced at $68.08 per barrel.

OPEC+ is more likely to gradually lift production cuts.

Senior energy analyst Saul Kavonic of MST Marquee pointed out that if OPEC+ ignores market demand and directly lifts production cuts, it will cause big trouble:

"This would essentially turn into a price war to compete for market share, which could push oil prices down to levels not seen since the outbreak of the COVID-19 pandemic."

However, most analysts believe that OPEC+ is more likely to choose to gradually lift production cuts early next year, rather than immediately and completely. In terms of voluntary production cuts, OPEC+ has always shown strict discipline, even extending the duration of the cuts.

In September, OPEC+ postponed the voluntary production cut plan of 'reducing 2.2 million barrels per day' by two months in order to curb the decline in oil prices. Earlier this month, OPEC+ once again decided to postpone the scheduled oil production increase by one month until the end of December.

The market is bearish on oil prices for the upcoming year.

Currently, oil prices are facing multiple downward pressures, such as major oil-producing countries outside of OPEC+ like the USA, Canada, Brazil planning to increase oil supply, etc.

However, the most important factor is Trump's potential return to office. He had vowed to cut energy prices in half, which would require oil prices to drop below $40 per barrel.

Analysts believe that Trump's return could trigger trade frictions, leading to a global GDP decline, further weakening oil demand growth, especially in the logistics industry where diesel is widely used.

Trump has also mentioned the "drill baby drill" policy, which may encourage domestic oil and gas production in the USA by lowering federal land leasing fees, simplifying permit approval processes, and other means.

Additionally, if Trump continues his previous policy of "maximum pressure" and implements new sanctions on Iran and Venezuela, although it may push up oil prices in the short term, in the long run, the increase in global supply will continue to put pressure on oil prices. Trump has shown close relationships with oil-producing countries like Saudi Arabia, so his policies may help bring more oil into the market.

Therefore, the market consensus is that oil inventories will "substantially" increase next year, Citigroup's energy global strategy analyst Martoccia Francesco said:

"If the production group continues with their production plans, the market's surplus could almost double... reaching 1.6 million barrels per day."

Market even believes that even if OPEC+ does not lift the production cuts, the outlook for oil prices remains bearish.

Editor/ping