Citigroup analysts are predicting a significant decline in oil prices, forecasting that Brent crude could fall to $60 per barrel by the end of 2025, with an average of approximately $62 per barrel expected through the fourth quarter of 2026.
Key Drivers Behind the Forecast
The investment bank’s revised outlook centers on two primary factors: OPEC+ plans to increase production and ongoing Chinese stockpiling activities. The organization announced its intention to roll back voluntary production cuts of 1.6 million barrels per day starting in October 2025, which has prompted Citigroup to adjust its global oil supply projections.
According to the bank’s analysis, this production increase could result in substantial inventory builds of 1.1 million barrels per day in 2025, escalating to 2.1 million barrels per day in 2026. These additions would contribute to an already loosening global supply situation.
Market Impact and Inventory Projections
Citigroup estimates that by late 2026, global oil inventories will reach 10.9 billion barrels, providing 103 days of forward demand coverage. This substantial inventory buffer reflects the expected oversupply conditions in the coming years.
Current market conditions already reflect some of these concerns, with Brent crude declining more than 10% and trading around $66 per barrel as of September 19, 2025.
Year-to-Date Price Performance
Oil prices have experienced significant volatility throughout 2025. Starting the year at $74.93 per barrel, Brent crude reached its highest point of $82.03 on January 15 before entering a downward trend.
The commodity faced pressure from tariff concerns in February and early March, pushing prices below $71. A brief recovery in late March brought prices back to $74, but this momentum was short-lived, with oil closing April at a low of $63.12.
May and June saw renewed strength supported by geopolitical tensions and concerns about potential Iranian supply disruptions, with prices climbing back to $72 in July. However, August brought another sharp selloff of over 7% on supply-demand imbalance forecasts, ending the month at $67.
Recent Market Dynamics
The latest price decline follows the Federal Reserve’s September 17 meeting, where policymakers cut interest rates by 0.25 percentage points and signaled additional cuts ahead. While rate cuts typically stimulate economic activity, market participants are interpreting this monetary easing as a response to economic cooling, raising concerns about reduced fuel consumption by businesses and households.
Labor market data presents a mixed picture, with initial jobless claims falling last week after a previous spike. However, the broader employment landscape continues to soften as both labor demand and supply moderate.
The combination of increased oil supply from OPEC+ production decisions and potential demand weakness from economic concerns has created a bearish outlook that Citigroup believes will persist through the remainder of 2025 and into 2026.
