If OPEC ends its voluntary production cuts, oil prices could drop to $40 by 2025, predict analysts.

• If OPEC+ ends its current production cuts, oil prices could experience a significant decrease, according to market observers.
• If crude prices were to decline by 40%, it would mean a decrease of around $40 per barrel.
• Analysts predict that the alliance is more likely to choose a gradual unwinding in early next year rather than an immediate and full-scale one.

If OPEC+ ends its current output cuts, oil prices may experience a significant drop, according to market analysts who anticipate a bearish year for crude.

Since the Arab Spring, there has been more fear about 2025's oil prices than in any year I can remember, according to Tom Kloza, global head of energy analysis at OPIS, an oil price reporting agency.

If OPEC unwound and didn't have any agreement to limit production, oil prices could drop to $30 or $40 a barrel, resulting in a significant decline in market share, according to Kloza.

If the price of crude oil declines to $40 a barrel, it would result in a 40% reduction of current prices. The global benchmark Brent is currently trading at $72 a barrel, while U.S. West Texas Intermediate futures are around $68 per barrel.

If oil demand growth next year is likely to be only around 1 million barrels per day, a complete removal of OPEC+ supply cuts in 2025 will result in a significant decrease in crude prices, potentially reaching $40 per barrel, according to Henning Gloystein, head of energy, climate and resources at Eurasia Group, as stated on CNBC.

Saul Kavonic, senior energy analyst at MST Marquee, stated that if OPEC+ does not consider demand when ending production cuts, it could lead to a price war for market share, potentially causing oil prices to drop to levels not seen since the Covid pandemic.

Analysts predict that the alliance is more likely to choose a gradual unwinding in early next year rather than an immediate and full-scale one.

The oil cartel has been strictly adhering to its output cuts, even extending them.

OPEC+ delayed plans to reduce production cuts by 2.2 million barrels per day for two months in an attempt to halt the decline of oil prices. The 2.2 million bpd reduction was set to end in September.

The oil cartel postponed the planned oil output increase until the end of December.

The sluggish post-Covid recovery in demand from China, the world's second-largest economy and leading crude oil importer, has weighed down oil prices. In its monthly report released Tuesday, OPEC lowered its 2025 global oil demand growth forecast from 1.6 million barrels per day to 1.5 million barrels per day.

Gloystein pointed out that the pressured prices were also intensified by an oversupplied market, particularly as key oil producers outside the OPEC alliance, including the U.S., Canada, Guyana, and Brazil, plan to increase supply.

Bearish year ahead for oil

According to Citibank energy strategist Martoccia Francesco, the market consensus predicts a "substantial" oil stock build next year.

If the producers group decides to move forward with their production plan, the market surplus could potentially increase to approximately 1.6 million barrels per day, according to Francesco.

If OPEC+ does not reduce its cuts, the future of oil prices remains uncertain, with Citi analysts predicting an average Brent price of $60 per barrel next year.

The upcoming presidency of Donald Trump is linked by some to a possible trade war, according to analysts who spoke to CNBC.

A trade war, particularly against China, could result in significantly lower prices, according to OPIS' Kloza.

Trump has also advocated for a "drill baby drill" policy for U.S. producers, promising to reduce energy costs by half.

According to Matt Smith, Kpler's lead oil analyst, for retail gasoline prices to decrease, oil must fall below $40 per barrel.

Currently, gasoline prices are at a "sweet spot" of $3 per gallon, where consumers are not experiencing a pinch and producers are still receiving sufficient input prices, according to Smith.