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Crude Oil Prices to Ease to $75-85 by 2027, Diesel Market Remains Tight: FGE NexantECA
- •FGE NexantECA forecasts crude oil prices to moderate to $75-85 per barrel by 2027, with an average of $80 next year, driven by increased non-OPEC supply.
- •Near-term crude prices are expected to remain volatile, influenced by geopolitical headlines, particularly developments in the Middle East and the Strait of Hormuz.
- •Physical crude prices remain elevated, trading between $110-$130 per barrel, despite market drivers being largely geopolitical rather than fundamental shifts.
- •Non-OPEC supply, especially from Guyana, Brazil, and Venezuela, is projected to add 700,000-800,000 barrels per day year-on-year in 2024.
- •The diesel market is anticipated to remain tight through 2027 due to risks to Middle Eastern winter-grade diesel supply to Europe, reduced Russian refining capacity, lower Chinese refinery runs, and potential US export restrictions.
Key Questions Answered
FGE NexantECA expects crude oil prices to ease to an average of $75 to $85 per barrel in 2027, with $80 as the average. Meanwhile, the US Energy Information Administration (EIA) forecasts Brent crude to average $69 per barrel in 2027 as Middle East production recovers. Additionally, FGE NexantECA notes that prices could fall to $70–80 per barrel if the global market enters a surplus next year.
The diesel market will remain tight due to several constrained supply factors, including potential disruptions to Middle Eastern winter-grade diesel supplies to Europe affecting up to 1 million tonnes per month. Furthermore, Russian refining capacity is under pressure with about 1.6 million barrels per day offline from drone attacks, lower Chinese refinery runs, and potential US diesel export restrictions. Refined product prices like diesel and gasoil also remain elevated in markets such as the US and Europe.
Crude prices could ease as non-OPEC supply rises, with Latin American producers like Guyana, Brazil, and Venezuela expected to add 700,000 to 800,000 barrels per day year-on-year. However, the market remains largely driven by geopolitical headlines, Iran-US relations, and changing traffic expectations through the Strait of Hormuz. Strait traffic currently sits around 6 million bpd compared to 15 million bpd pre-war, though flows are expected to recover over time.
