Commodity analysts at Standard Chartered, once firmly bullish on oil prices, have now reversed their stance amid shifting market dynamics and growing economic uncertainty. The bank has significantly downgraded its oil price forecasts, slashing its 2025 projection by $16 to $61 per barrel and its 2026 forecast by $7 to $78 per barrel.
This marks a stark shift from earlier optimism, which had been driven by strong supply fundamentals—especially declining U.S. production growth and disciplined output from OPEC+. Previously, StanChart noted that non-OPEC+ supply growth had dropped from 2.46 million barrels per day (mb/d) in 2023 to just 0.79 mb/d in 2024, largely due to slowing U.S. liquids production. That number is expected to drop further, with projected growth of only 367 kb/d in 2025 and 151 kb/d in 2026.
However, recent developments have prompted a more cautious outlook. StanChart now believes the Trump administration’s tariff-heavy trade policies are increasing the risk of a recession. Concerns were amplified after a disappointing U.S. economic report showed a -0.3% contraction in Q1—the first decline in three years—as companies rushed to import goods ahead of new tariffs. While job growth remained relatively stable in April with 177,000 new positions added and unemployment holding at 4.2%, investor sentiment has turned sour.
Adding to the bearish tone is discord within OPEC+. StanChart has expressed doubts over some members’ ability to meet production quotas. Kazakhstan, for instance, has exceeded its OPEC+ target by a wide margin, producing 2.12 million b/d in February—a 13% jump from January and well above its agreed limit of 1.468 million b/d. Saudi Arabia is reportedly frustrated with quota violations by Kazakhstan and Iraq, and may be prepared to increase output in response.
Despite Brent crude prices hovering more than $30 below the $96.20 per barrel Saudi Arabia needs to balance its budget, the kingdom has financial levers—such as sovereign debt issuance and foreign exchange reserves—to withstand prolonged lower prices.
Meanwhile, Wall Street bears appear vindicated. A December survey by Haynes Boone LLC had predicted oil would fall below $60 per barrel during President Trump’s term, a forecast that now looks increasingly plausible.
