Crude oil price can drop to $55-60 a barrel by December 2025: Premasish Das

Crude oil markets are pricing in a fair amount of uncertainty at the current levels, Das said. That's why oil had dropped below $60 for a time-before the West Asia tensions pushed it back up

It has been a volatile first half for crude oil prices as they dealt with geopolitical developments and US’ tariff-related threats. Singapore-based Premasish Das, executive director for oil markets research and analysis at S&P Global Commodity Insights, tells Puneet Wadhwa on the sidelines of their Commodity Market Insights Forum in New Delhi that the oil markets are expecting oversupply and weak demand in the second half of 2025. Edited excerpts:

 

How are the oil markets approaching the July 9 deadline on tariffs?

 

It’s very uncertain. Initially, the general thinking was that within 90 days of the pause, things would become clearer. But we weren’t too optimistic. Getting multiple countries on board for deals in such a short span was always going to be difficult—and that’s exactly what’s playing out.

 

What worries me is the uncertainty of what happens if Mr. Trump is unhappy with the progress. He could react strongly, and countries like the EU and Canada have made it clear that they are willing to retaliate.

 

So, overall, the outcome is unpredictable. And this will likely weigh on the second half of the year, which we already believe will be challenging. Much of the economic activity was front-loaded into the first half because of the known 10 per cent tariff. As a result, we expect a noticeable slowdown in activity and oil demand in the second half of 2025 (H2-CY2025).

 

So you’d say oil markets are still in a wait-and-watch mode?

 

Absolutely. There was some uncertainty during the first half after the pause, but the second half looks even murkier. The idea that manufacturing will return to the US overnight, as Mr. Trump hopes, is unrealistic—it will take years. Meanwhile, supply issues remain unresolved. Even the Fed appears cautious, despite inflation seeming under control, because uncertainties like these can escalate anytime. That’s one of the key risks.

 

What’s your average price forecast for oil in the second half of 2025?

 

We’re projecting Brent to be between $55–60 per barrel by December 2025, with an average for the second half slightly above $60 due to the current high starting point. Our base case assumes that OPEC+ will not aggressively defend prices in this environment of muted demand growth. If they change course, of course, the forecast would shift. 

 

What’s already priced into the oil market at this point?

 

A fair amount of the uncertainty is priced in. That’s why oil had dropped below $60 for a time—before the West Asia tensions pushed it back up. The market has priced in slower global economic activity, sluggish oil demand, and a potential increase in OPEC+ supply. 

 

What is not fully priced in is how the West Asia conflict might evolve. There’s still a geopolitical risk premium built into prices—otherwise, they’d be lower, based on supply-demand fundamentals.

 

So yes, markets are already expecting oversupply and weak demand. But what’s unpredictable is how the US, especially President Trump, might respond to developments.

 

Can you share some light on the current total global oil demand, and how do you see it changing in the second half of 2025?

 

Global oil demand is around 105 million barrels per day. We're expecting that growth will slow in H2. Annual growth was projected at around 0.8 million barrels/day, but in Q3 and Q4, we may see quarterly demand drop by about 300,000–400,000 barrels/day.

 

What about the demand from China and India—two of the largest oil consumers?

 

China’s oil demand is around 16 million barrels/day. Traditional transport fuel demand—gasoline and diesel—has already peaked there. Refined products demand in India - 5.3 million barrels per day (b/d) in 2024. In 2025, we expect it to be 5.4 million b/d, y-o-y growth is 110 thousand b/d, which is not much. On the other hand, refined products demand in China was 16.9 million b/d in 2024. In 2025, we expect it to be 17.1 million b/d, which again is not much. That said, almost all of the growth is likely to be in the petrochemical feedstocks like LPG and naphtha as the demand for gasoline and diesel is likely to dip. All this is below expectations.

 

Why is India’s demand growth falling short despite being a long-term growth market?

 

It’s puzzling. Alternative fuels are certainly part of the story—CNG buses, autos, and cars are now quite common. EV penetration, while still small, is growing rapidly. These factors are chipping away at liquid fuel demand. 

 

Also, automobile sales—especially four-wheelers—have slowed recently, which could be another factor. But overall, we view these as temporary speed bumps. India remains the strongest long-term growth market among emerging economies.

 

If the demand is slowing, why is OPEC+ increasing production? Isn’t that counterproductive?

 

It’s complex. Some OPEC+ countries—like Kazakhstan and the UAE—have seen significant foreign investment in oil projects and are under pressure to increase production to justify those investments.

 

Even though Saudi Arabia is taking on the biggest burden in production cuts, not all members are adhering to the pact equally. So there’s resentment—Saudis may be thinking why are they taking the pain alone? Hence, there's a strategy emerging: let production rise, allow prices to drop, see how the market responds, and return to the table later.

 

There could also be an attempt to push out marginal producers—particularly from the US—like they tried in 2014–15. Back then, it didn’t work, but now US producers are more focused on returning value to shareholders, which may limit their reinvestment capacity. So, the outcome could be different.

 

At what price does oil production become unviable for most producers?

 

There’s no single number. West Asian producers have very low production costs—some even under $20 per barrel. But their fiscal break-even points—what they need to balance national budgets—can be as high as $80–90 per barrel. So while their cost of production is low, their target prices are much higher. For most producers, a sweet spot seems to be between $60 and $70 per barrel.

 

US producers are a key variable. If oil stays below $60, some of them will be hit. Trump may be okay with low prices right now because it helps control inflation and offset tariff-related pressures—but eventually, lower U.S. output may not be politically acceptable. So we see a balancing act playing out.