My expectations for February 2025 West Texas Intermediate (WTI) oil prices are the same as they were for January 2025—that is, $67.50 to $77.50 per barrel. For most of January, prices remained below $77.50. Just after the US announced additional sanctions against Russia, prices spiked temporarily to about $77.50, with some traders believing that prices were headed to $85 per barrel or higher. That did not happen.
Aside from the additional Russian sanctions and the change in the US administration, there have not been a lot of new developments. That is why I am keeping my forecast the same as it was last month.
There are bullish and bearish views about the future price of oil. On the bearish side, Javier Blas from Bloomberg wrote the following in his January 28 article (subscription required) “OPEC+ Will Buckle Under Trump’s Pressure”:
For his part, I don’t think Trump is going for a kill. His negotiating style is simple: Aim high and keep pushing. His administration is full of experienced oil hands who know that sub-$50-a-barrel would hurt the American petroleum industry as much as plus-$100 slows the economy. Thus, Trump is likely to content himself with somewhat lower crude prices of, say, $60 to $70 a barrel. For guidance, remember that the first time Trump posted on social media about the cartel during his first term was in April 2018, when Brent was nearing $75 a barrel.
What’s clear is that Trump sees $80 a barrel — the price level of Brent crude around the time of his inauguration — as too high. Rightly or wrongly, he believes that the price of oil is a benchmark of economic competence, where up is bad, down is good. In his second term as president, lower crude prices will play a key role in offsetting any impact of higher tariffs on inflation. Reduced oil prices are, in Trump’s world, also crucial for foreign policy, including reaching a deal to end the war in Ukraine.
My own belief is that OPEC+ will not necessarily roll over and comply with the administration’s desire for lower prices in the range of $60 to $70 a barrel for Brent. As a reminder, Brent typically trades for about $2 to $4 higher than WTI. So I find Blas’s outlook a tad bearish.
On the bullish side, Eric Nuttall just released a new YouTube video “Energy Market Shock: AI, Natural Gas, and Canadian Oil Tariff Fears | Ninepoint Energy Market Update” where he expresses his bullish outlook. As I have indicated before in prior posts, I am not as bullish as Nuttall.
As I compose this post in the evening on Thursday, January 30, WTI is trading for about $73.30 a barrel. President Trump has indicated that tariffs will be imposed against Mexico and Canda on February 1, and he has stated he will probably decide this evening whether to impose tariffs on their oil sectors.
US President Donald Trump says he will go ahead imposing a 25% tariff on Canada and Mexico from Feb 1.
Trump added he’s still mulling whether the tariffs will hit oil too. “We may or may not, we’re going to make that determination probably tonight” based on oil prices.#OOTT
— Javier Blas (@JavierBlas) January 30, 2025
Depending on what President Trump does and how the markets react, there may be some near-term volatility. I expect, however, that prices will remain within my expected range of $67.50 to $77.50 per barrel.