Oil Price Outlook 2025: Can WTI Break Below $65 or Spike Past $90?
Is This the Calm Before the Oil Storm or the First Crack in the Floor?
Crude oil markets are entering a decisive phase. After over two years of price action mostly contained within the $65–$90 per barrel range, West Texas Intermediate (WTI) crude (CL=F) is now trading around $67—testing the lower bound of its long-standing support level. The fundamental backdrop driving this test includes a fresh unwind of OPEC+ supply cuts, uncertainty from U.S. political shifts under Trump’s second term, and surprising global demand weakness. Each factor is pulling at the seams of the market's equilibrium—and one crack could send prices tumbling through support or surging toward a new ceiling.
The price ceiling formed during the 2022 invasion of Ukraine, which briefly propelled oil near $120, is now a distant memory. Since then, front-month WTI futures have failed to establish a breakout, and the downward pressure from increased supply is starting to outweigh bullish narratives. Brent (BZ=F) trades just under $73, similarly caught between recession fears and Middle East risk premiums. The next move will depend on the interaction of production politics, macro demand, and fragile investor sentiment.
Egypt’s Massive $7 Billion Bet: Will New Projects Offset the Energy Crisis Hangover?
In the midst of this volatile global market, Egypt is rolling out one of its most ambitious fossil fuel expansions ever—announcing a $7 billion petrochemical complex in New Alamein City and offering 13 new oil and gas blocks for auction. This is a sharp shift from the 2024 crisis, when Egypt was forced to import billions in natural gas due to a sharp fall in domestic output. At the time, the government resorted to load-shedding and leaned on external bailouts from Saudi Arabia and Libya just to secure basic energy needs.
Egypt's pound collapsed by over 60% from March to September 2024, and the country reportedly racked up $6 billion in energy import debt, creating a sense of urgency in Cairo to bring in new foreign investment. Seven of the undeveloped blocks are being offered in two clusters—Aten, Merit, and Rahmat; plus Notus, Salamat, Satis, and Salmon—all designed to reduce development cost and fast-track production timelines.
But optimism may need to be tempered. While Egypt is the second-largest non-OPEC oil producer in Africa, its flagship Zohr gas field is maturing faster than expected, and recent exploration disappointments have raised questions over whether the new auction rounds will attract serious capital. There’s also tension in Egypt’s energy policy direction: green energy goals have been dialed back from 58% to 40% renewables in the national mix by 2040, highlighting a fossil-fuel-heavy reality behind the green rhetoric.
OPEC+ Loosens the Tap: Supply Is Rising and Support Is Weakening
One of the most impactful shifts on oil pricing right now is the ongoing easing of OPEC+ production cuts, which originally began in April 2023. That decision stabilized prices near $80 for much of 2023, but now the unwind is creating surplus risk. Increased supply from core producers—including Saudi Arabia and Russia—comes at a time when global macro growth is slowing and trade wars are shaking consumer and investor confidence.
Despite threats of supply disruption from geopolitical shocks, such as potential escalations in Ukraine or the Middle East, the dominant story now is oversupply creeping back into the market, especially as Chinese demand continues to underperform expectations and the U.S. ramps up output. The possibility of a Russia sanctions rollback further clouds the outlook. If sanctions are softened, Russia—still believed to be the second-largest oil exporter globally—could flood the market via shadow fleets that are already operating with limited oversight.
UK’s U-Turn on Oil Licensing: A Lifeline for North Sea Production?
In contrast to Egypt's expansion push, the UK’s Labour government under Keir Starmer has maintained its public stance against new oil and gas exploration. But in practice, London has pivoted toward tieback approvals, allowing new drilling in areas linked to existing fields. This quiet compromise—designed to appease both environmentalists and industry players—could allow production to continue in the North Sea without technically violating the no-new-license policy.
Adding further relief for producers, the government announced it will end the controversial 78% windfall tax in 2030, bringing the tax rate back down to 40%. That’s a major signal to companies like Serica Energy, which warned of $6.5 billion in lost cash flow and 10% production declines since the tax was introduced. While climate activists see this as backtracking, the industry sees it as overdue realism. For as long as oil demand exists—and with global consumption still over 100 million barrels per day—governments can't afford to drive producers offshore.
Trump’s Tariffs and the Energy Wildcard: Will U.S. Policy Reignite a Demand Crunch?
Energy markets now face extreme political volatility coming from the U.S. administration, where Trump 2.0 is pushing trade wars into overdrive. At least 70 executive orders have been issued in under two months, most of them targeting trade, deregulation, and fiscal contraction. Oil traders are watching closely, because while tariffs may protect certain domestic industries, they also risk slowing global growth and triggering demand destruction—a bearish factor for oil.
Trump’s rumored plans to create a “gold-backed” financial system and audit U.S. gold reserves have already rattled precious metals markets, and a similar shockwave is possible in energy if he imposes new tariffs on oil-producing nations or restricts refined product imports. The result would be a chaotic pricing environment, where fundamentals take a backseat to headlines and executive orders.
WTI Crude Oil (CL=F) Faces Make-or-Break Technical Zone at $65
Technically, WTI is walking a tightrope. After rebounding from $65 levels multiple times since 2022, a decisive breakdown below that line would signal a bearish trend shift, likely opening the door toward $60 and then $55, especially if OPEC continues easing output. On the upside, resistance stands at $74.50, then $78 and $80. The last high above $85 came in late 2023, and it has been rejected since.
Volatility is expected to rise sharply in Q2 2025. With OPEC’s April meeting approaching, Egypt’s auctions closing in May, and the Trump administration continuing to release policy shocks on a near-weekly basis, oil traders must navigate a deeply fragmented, high-risk market.
If economic deterioration in the U.S. deepens and central banks globally remain hawkish, demand headwinds will persist. But if geopolitical chaos escalates or dollar weakness accelerates, oil may yet find a lifeline. Until then, $65 remains the final floor, and if it cracks, a structural bear market could begin.
Verdict: Cautious Hold, with a bearish bias unless WTI reclaims $74+ on strong volume and breaks above the key $78–$80 ceiling. Any decisive close below $65 would confirm downside extension.
