Global supply dynamics and slower demand growth are expected to fuel oil and gas prices’ continued decline in 2025. According to economists, President Donald Trump’s pledge to reduce energy costs by loosening regulations on the production of gas and oil may not have a significant immediate effect on pricing.
Energy prices will be shaped in the coming year by the interaction of market forces and governmental policy, as the United States continues to be a major producer of oil worldwide.
Global Market Trends: Slowing Demand and Surplus Capacity
There is an abundance of supply and a slowdown in demand in the global oil market, which is paving the way for additional price drops. The excess capacity possessed by OPEC+, an alliance of major oil-producing countries, is one of the most important causes. Although this group has been sustaining self-imposed output reductions for more than a year, they are nevertheless capable of rapidly increasing production if market conditions demand it.
China’s transition to electric vehicles (EVs) is also helping to lower the world’s oil use. Demand growth is slowing as the world’s greatest energy user moves away from fossil fuels, which is driving down prices.
Despite recent price rallies, analysts from Goldman Sachs predict Brent crude oil prices will average around $76 per barrel in 2025, while others project even lower figures. This trend has already helped narrow refinery margins, leading to reduced costs for consumers.
Domestic Energy Policies and Their Limitations
President Trump’s proposed energy policies aim to increase domestic oil and gas production by rolling back restrictions on offshore drilling and federal land leases. His administration views these moves as essential for maintaining U.S. “energy dominance.” Trump’s nominee for Energy Secretary, Chris Wright, has committed to expanding production both at home and abroad.
However, U.S. production is already near its peak, accounting for roughly 20% of the world’s total oil supply. Experts caution that regulatory changes may have minimal immediate impact on production levels or prices.
Additionally, geopolitical risks could introduce volatility into the market. Trump’s potential reimplementation of sanctions on Iran and Venezuela—two significant oil-producing nations—could restrict their exports and tighten global supply. While such actions might stabilize or even increase oil prices, they could also disrupt efforts to reduce costs for American consumers.
Modest Price Relief for Consumers
In spite of these complications, a little decrease in gas costs is anticipated in 2025. For the third year in a row, the average price is expected to decline to $3.20 a gallon, according to the Energy Information Administration (EIA). However, unless there is a significant economic collapse, Trump’s campaign pledge of less than $2 per gallon gasoline doesn’t seem likely to come to pass.
For American consumers, 2025 may bring some relief at the pump, though broader market and geopolitical challenges could temper these gains. The balance between policy, production, and global demand will remain a critical factor in shaping energy costs.
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