Drivers could be in for some relief at the pump in the coming year as experts predict that Donald Trump’s plans to ramp up US oil production might bring prices down. Analysts suggest oil prices could drop to as low as $60 per barrel in 2025. For drivers, this could mean knocking as much as 10p off the price of a litre of petrol, potentially reducing it to £1.26 – a price not seen since the early days of 2021.
Currently, petrol prices hover around £1.50 per litre, significantly lower than the peak of £1.90 per litre during 2022. Back then, demand was high, and the effects of Russia’s invasion of Ukraine pushed prices to record levels. However, with oil prices softening, there’s hope that drivers will feel less of a pinch in their wallets.
The expected price drop is tied to several factors. Greater US oil production, driven by Trump’s push for policies like “drill, baby, drill,” combined with weaker demand from struggling Chinese and European economies, is likely to flood the market with supply. Experts at JP Morgan, Bank of America, and Citi all forecast Brent crude oil prices to fall below $70 per barrel by late next year, with some even predicting prices as low as $60.
Simon Williams from the RAC explained what this could mean for UK drivers. If oil remains at around $60 a barrel and the exchange rate between the pound and dollar stays steady, petrol prices could drop by at least 10p per litre. For an average family car, this would mean saving around £5.50 on a full tank. Diesel prices, too, could dip to around 132p per litre.
Trump’s campaign promises included boosting domestic energy production, and reports suggest he’s ready to take action soon after stepping back into office. This might involve approving new permits for exporting liquefied natural gas (LNG) and opening up more areas for offshore drilling. The US, already the world’s largest crude oil producer and LNG exporter, could become even more dominant in the global energy market.
Analysts at Citi believe Trump’s energy policies, along with potential geopolitical shifts, could further push prices down. For instance, an end to the war in Ukraine, increased oil supply from OPEC nations, or improved US-Iran relations leading to more oil exports could all play a role in reducing costs.
Lower oil prices could also ease inflation, both in the US and globally. Cheaper fuel would mean lower transport and logistics costs, which could bring down the prices of everyday goods. In the UK, this might even shave off 0.1 percentage points from inflation for every $10 drop in oil prices, according to Paul Dales from Capital Economics.
For now, all eyes are on how quickly these changes will unfold. If oil prices drop sharply and petrol follows suit, it could offer welcome relief to households already grappling with high living costs. The last time oil stayed below $70 for an extended period was back in early 2021, a time when the world was navigating pandemic lockdowns and energy demand was at a low point.
As we head into the new year, drivers can hope for a brighter outlook at the pumps, with lighter bills and a bit more breathing room in their budgets.
