Crude oil price prediction: on the cusp of a crash to $60

Crude oil prices have remained on a downtrend as external uncertainties shape the demand/supply dynamics. Trump’s trade policy, coupled with the geopolitical risks, is alarming to investors.

Notably, the surprise OPEC+ output increase has further intensified the supply/demand imbalance. It appears the group has been following the political developments and is safeguarding its members’ interests. In the ensuing sessions, the asset may find its flooring as the fresh Chinese stimulus measures restores some hope to the market. 

China stipulates stimulus and growth target

Amid the current downtrend, crude oil price has found some support in the latest announcement on China’s stimulus measures. On Wednesday, the government highlighted its plans to issue ultra long-term special treasury bonds of 1.3 trillion yuan in 2025. 

The figure is about 300 billion yuan higher than those issued in 2024. Additionally, it plans to issue special treasury bonds worth 500 billion yuan to support large commercial banks and special purpose bonds worth 4.4 trillion yuan to ease local governments’ financial constraints. 

The measures are aimed at boosting the Chinese economy amid the intensifying trade tensions with the United States. In about one month, Trump has already imposed 20% tariffs on Chinese products. In retaliation to the latest 10% in duties, China on Tuesday enacted an additional 15% in duties on some US products, to take effect on 10th March.

Notably, a slowdown in China’s oil demand growth has been one of the asset’s bearish drivers in recent months. As such, the fresh stimulus measures and the overall efforts by the government towards its 2025 growth target of 5% have revived investors’ optimism over the country’s oil demand. China is the second largest consumer and leading importer of the commodity globally. 

Uncertainties continue to rock the demand/supply dynamics

External uncertainties have been weighing on the crude oil market; curbing Brent price gains at $82.50 since mid-July 2024. Since mid-January 2025 when the benchmark for global oil retested that resistance zone, it has dropped by about 15%. Concerns over the escalating trade war between China and the US, coupled with geopolitical risks and economic uncertainties pushed Brent oil to a level last recorded in December 2021 in Thursday’s session. 

Notably, OPEC+ decision to end its supply cuts has further added to the demand/supply imbalance. Since 2022, the Organization of Petroleum Exporting Countries and its allies has been cutting production in phases to support the oil market post-COVID. The output cuts of 5.85 million barrels per day, which equate to 5.7% of the global oil supply, have been based on the demand dynamics and predictions. 

Amid the slowdown in global oil demand, OPEC+ has taken the market by surprise with its decision to proceed with the planned output increase of 138,000 bpd as from April. It has linked its move to a “healthier oil market outlook”. Indeed, the alliance is the most bullish among all the relevant agencies and analysts; predicting a global demand growth of 1.4 million bpd in 2025 as well as 2026. 

Some analysts argue that the move is more about politics than it is about prices. More specifically, it may be about appeasing Trump, who has constantly called for the group to lower oil prices. Besides, the members may be looking to cash in on higher sales volumes as opposed to higher prices. This includes Russia, which is likely to benefit from sanctions relief amid the strained US-Ukraine relationship.  

Read more: OPEC+ faces tough decision: extend cuts or increase market share?

Crude oil price forecast

The weekly chart shows that the price of crude oil has been on edge in the past few months. It has remained between the support at $70 and resistance at $80. Most notably, it has formed a symmetrical triangle pattern whose two lines are nearing their confluence level. It also remains below the 50-week and 100-week moving averages. 

Therefore, Brent crude oil price is on the verge of a strong bearish breakdown that may push it to $60 soon.