Crude oil prices could fall below $50 a barrel this year, according to analysts including those from S&P Global. This would provide relief for American drivers after years of rising gas prices.
One key reason is weaker demand growth. The International Energy Agency (IEA) recently estimated demand growth at less than 1 million barrels per day (bpd) for 2025. This is the slowest growth since the pandemic lockdowns. Meanwhile, supply is increasing, especially from OPEC+, which has started boosting production after two years of cuts.
Despite these factors, oil prices are currently rising due to geopolitical reasons. The United States and China are negotiating a trade deal, and optimism around the talks is pushing prices higher. The hope is for a return to normal trade relations between the world’s two largest economies.
A recent update revealed that the U.S. government may ease chip export restrictions if China loosens its new rare earth export limits. These limits have caused panic in the car industry due to fears of a shortage of critical components.
Kevin Hassett, head of the White House National Economic Council, told CNBC he expects a deal soon. He said rare earth magnets from China could soon return to normal international markets once the agreement is made.
China imposed rare earth export restrictions in April. These restrictions threaten many industries and have carmakers warning they might have to shut down factories within weeks due to shortages.
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